Most Japanese Stocks Retreat After Monday Rally; Automakers Rise

Economic Outlook: Reasons to Be Bullish on Japan
  • Retail stocks fall on sales, household spending reports
  • Automakers extend gains as Toyota rises to highest since March

Most Japanese shares fell after the biggest rally in three weeks, as investors weighed economic data and speculated on the timing of U.S. interest-rate increases.

The Topix index was little changed, falling by less than 1 point in Tokyo. The measure pared an earlier loss of as much as 0.4 percent, as automakers rose following the yen’s drop against the dollar. The Topix jumped 2 percent on Monday, the most since Aug. 8, following Federal Reserve Chair Janet Yellen’s remarks that the case for a rate increase had strengthened in recent months. Reports showed retail sales and household spending fell in Japan, while investors awaited a slew of U.S. economic data scheduled for release this week, including on manufacturing and payrolls.

SecurityPercent ChangePrice
Nikkei 225-0.1%16,725.36

“Views on the U.S. interest-rate hike have eased a little after a day’s passed, and it’s difficult to see a clear direction ahead of the U.S. jobs data,” said Seiichi Miura, a strategist at Mitsubishi UFJ Morgan Stanley Securities Co. in Tokyo. “There’s a profit-taking mood in the Japanese stock market after the surge yesterday. That said, there’s not enough of a reason to keep selling.”

Japanese automakers, which had dropped as much as 34 percent this year as the nation’s biggest exporters were slammed by the strengthening yen, were among the biggest winners from the weekend gathering of central bankers at Jackson Hole. A gauge of automakers in the Topix is trading at the highest level since the end of April, as expectations for a U.S. rate increase have sent the yen sharply lower.

Japan’s household spending dropped for a fifth straight month in July and retail sales also declined, underscoring the weakness in domestic demand. The jobless rate was the lowest since 1995.

A total of 1,022 stocks declined on the Topix while 775 stocks rose. Volume on the measure was 18 percent lower than the 30-day average.

  • Most retail stocks declined. Department-store operator Marui Group Co. dropped 2.7 percent, while Fast Retailing Co., the operator of Uniqlo, was little changed after falling as much as 0.7 percent.
  • A gauge tracking automakers extended Monday’s 3.9 percent gain, adding 0.6 percent Tuesday as bellwether Toyota Motor Corp. advanced 0.6 percent to the highest close since March.
  • Electronic-equipment maker Hitachi Ltd. climbed 0.4 percent. The company plans to cut costs by 200 billion yen ($2 billion) this fiscal year and improve efficiency to meet its operating profit forecast, the Nikkei newspaper reported.

Futures on the S&P 500 Index slid less than 0.1 percent. The underlying measure rose 0.5 percent on Monday after falling for three days. The odds of a Fed rate rise by the end of the year stood at 61 percent, futures data showed.

“There’s a lot of data and that’s why the market’s so cautious,” said Andrew Sullivan, managing director of sales trading at Haitong International Securities Group Ltd. in Hong Kong. “The trouble is, you know that the Fed is going to be looking at all of that. You just don’t know at the end of the day which bits of data the Fed is going to put most focus on, so that makes it very difficult.”

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