Japan Shares Slide After Yen Advances as Fed Signals Low Rates

Are Yen Investors Losing Faith in BOJ Stimulation?

Japanese shares declined, weighed down by a stronger yen, after Federal Reserve minutes indicating a rate increase won’t be coming soon weakened the dollar.

The Topix index slid 1.6 percent to 1,290.79 at the close in Tokyo, while the Nikkei 225 Stock Average also lost 1.6 percent. The yen rose 0.5 percent against the greenback to 99.81, near its strongest level since November 2013, after July minutes showed Fed officials generally agreed to wait for more data before raising interest rates again.

“The minutes struck a cautious note against any rushed rate hike decision, while continuing to support the idea of a moderated rate increase,” said Mitsushige Akino, a Tokyo-based executive officer at Ichiyoshi Asset Management Co. “The odds are for a December hike, rather than a September one, and the yen looks set to extend gains from here.”

Futures on the S&P 500 Index climbed 0.1 percent. The underlying measure gained 0.2 percent on Wednesday. While the minutes showed officials were divided in July over the urgency to raise interest rates again, they said they needed more data “in order to gauge the underlying momentum in the labor market and economic activity,” the minutes released in Washington said.

Focus now turns to next week’s symposium of global policy makers in Jackson Hole, Wyoming, when Fed Chair Janet Yellen will deliver a speech.

“If there’s anything that hints at the possibility of a rate hike this year, markets will move,” said Masaaki Yamaguchi, an equity market strategist at Nomura Holdings Inc. The U.S. presidential election could be another reason for the Fed to delay raising rates, he said.

About five shares fell for each that rose on the Topix, with volume 7.1 percent below the 30-day average. The measure has fallen almost 17 percent this year, the second-worst performing developed market, as the yen’s advance cut the outlook for profits at Japan Inc.

  • SoftBank Group Corp. slumped 4.6 percent, weighing the most on the Topix. The mobile giant is still holding out hope for a potential deal to merge its unit Sprint Corp. and T-Mobile US Inc., according to people familiar with SoftBank founder Masayoshi Son’s thinking.
  • Among exporters, Toyota Motor Corp. fell 1.8 percent, Nissan Motor Co. slipped 2.6 percent and Mazda Motor Corp. lost 3.9 percent.
  • Sony Corp. gained 0.5 percent. The electronics maker is planning its first non-convertible bond sale in more than three years after posting a surprise profit in the fiscal first quarter. The proceeds will be used to repay debt.

Japan’s exports declined more than forecast in July, data showed Thursday, with shipments down for a 10th consecutive month. The continued drop highlights the ongoing challenge of jump starting growth at the world’s third-largest economy and pulling the country out of the doldrums.

(An earlier version of this story corrected the first paragraph to say the dollar weakened, not strengthened.)

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