Japan's Topix Index Retreats From Six-Week High After Holiday

  • Investors watch U.S. rate comments, digest China trade data
  • Sharp soars after report it may get 200 billion yen investment

Japanese stocks fell, with the Topix index retreating from a six-week high, as trading resumed after a holiday. Energy-related shares led losses after crude oil plunged.

Oil explorer Inpex Corp. slumped 3.4 percent. Fast Retailing Co. sank 3.7 percent, extending Friday’s 9.8 percent drop after forecasting profit that missed estimates. Toyota Motor Corp. and Honda Motor Co. sank at least 2.5 percent after Jefferies Group LLC lowered its rating on the automakers’ shares. Sharp Corp. jumped 6.5 percent after a report it may get 200 billion yen ($1.67 billion) in investment from a state-backed fund.

The Topix dropped 0.8 percent to 1,503.13 at the close in Tokyo, with about five shares falling for every four that rose. The Nikkei 225 Stock Index declined 1.1 percent to 18,234.74. Both gauges last week posted their biggest weekly gain since July. The yen traded at 119.86 per dollar, strengthening for a second day.

“Shares rose quite a bit last week, so investors are taking profits now,” said Soichiro Monji, chief strategist at Tokyo-based Daiwa SB Investments Ltd., which oversees the equivalent of $48.4 billion. “Fundamentals are also affecting shares, with oil-related stocks dropping because of lower crude prices.”

E-mini futures on the Standard & Poor’s 500 Index slipped 0.1 percent after the underlying gauge added 0.1 percent on Monday, rising for a fourth day amid reduced volume.

China Data

China’s export decline slowed in September, while imports slumped for an 11th month, data showed Tuesday. Imports slipped 17.7 percent in yuan terms, widening from a 14.3 percent drop in August. Overseas shipments fell 1.1 percent, better than economists’ estimates for a 7.4 percent decline and a 6.1 percent drop a month earlier.

“The external environment isn’t bad, but Japanese stocks have climbed from a big sell-off -- it’s time they took a rest,” said Toshihiko Matsuno, chief strategist at SMBC Friend Securities Co. in Tokyo.

Fed Hints

Investors are also watching for further hints on the Federal Reserve’s policy intentions. Fed Bank of Atlanta President Dennis Lockhart, speaking Monday to a group of economists in Orlando, Florida, repeated his view that he backs the first rate increase since 2006 by the end of the year. That followed weekend comments by Fed Vice Chairman Stanley Fischer backing the case for a year-end increase in interest. The Chicago Fed’s Charles Evans reiterated his view that a later liftoff may be the best policy as inflation struggles to gain traction.

Traders are now pricing in about a 39 percent chance of a rate increase by December, with a 62 percent probability of a move by March.

The Topix Mining Index led declines among the 33 industry groups on the broader gauge after oil prices sank the most in six weeks on Monday as OPEC reported its members pumped the most crude in three years. Inpex slumped 3.4 percent, while Japan Petroleum Exploration Co. lost 3.2 percent.

Fast Retailing declined 3.7 percent, the biggest drag on the Nikkei 225. The stock tumbled after the the operator of the Uniqlo brand stores said net income will probably be 115 billion yen in the year ending August 2016, missing analyst estimates for 141.6 billion yen in profit.

Toyota sank 2.5 percent to be the biggest drag on the Topix, while Honda lost 2.8 percent. The carmakers’ ratings were lowered by Jefferies, which also cut its view on the auto sector to bearish, citing the likelihood of a stronger regulatory environment due to the emissions scandal at Volkswagen AG damping earnings for the industry.

Sharp jumped 6.5 percent, the most since Aug. 28, after a Kyodo news report that state-backed Innovation Network Corporation of Japan is considering a 200 billion yen investment in the struggling display maker. Sharp may post a 50 billion yen loss at its liquid-crystal display business for the first half of fiscal year 2015, according to the report.

Before it's here, it's on the Bloomberg Terminal.