Japanese Stocks Fall Ahead of Fed and BOJ Meetings, Earnings

  • Investors await Fed's decision on Wednesday and BOJ on Friday
  • Friday is peak of earnings season, with more than 300 releases

Japanese stocks fell amid reduced volume as investors awaited policy updates from the Federal Reserve and the Bank of Japan later this week, as well as a rush of company earnings. Energy shares led declines while retailers gained.

M3 Inc. sank 7.6 percent after earnings at the supplier of medical information services missed broker estimates. Energy explorer Inpex Corp. lost 3.1 percent after crude oil dropped to near a two-month low. Advantest Corp. sank 2.2 percent after the maker of electronics lowered its full-year profit forecast on deteriorating sales. Seven & i Holdings Co. advanced 3.2 percent after Kyodo News reported activist hedge fund Third Point has taken a stake in the retailer.

The Topix index dropped 1 percent to 1,543.11 at the close in Tokyo, its first loss in three days as more than three shares fell for each that rose. Volume was about 14 percent below the 30-day average. The Nikkei 225 Stock Average lost 0.9 percent to 18,777.04. The yen added 0.4 percent to 120.62 per dollar, strengthening for a second day.

“Given how great Japanese stocks have done through yesterday, today we’re seeing some profit taking ahead of the Fed meeting,” said Tomoichiro Kubota, a senior analyst at Matsui Securities Co.

Fed, BOJ

The Fed announces its rate decision on Wednesday, with futures traders pricing in just a 6 percent possibility of an increase. Expectation are higher for action in Japan when the BOJ meets on Friday, with 16 of 36 analysts surveyed by Bloomberg forecasting the central bank will bolster monetary policy.

“The market wants to see what kind of statement the Fed issues and sniff out what they’re thinking,” said Yoshito Sakakibara, an economist at JPMorgan Chase & Co.’s asset-management unit in Tokyo. “The BOJ will be watching how the market reacts to that and it will greatly impact their thinking on the 30th.”

Friday also marks the busiest day of the Japanese earnings season, with more than 300 companies expected to file results, including NTT Docomo Inc. and Japan Airlines Co. Companies reporting Tuesday after the market closes include robot-maker Fanuc Corp. and camera-maker Canon Inc.

M3 sank 7.6 percent after reporting first-half operating profit of 9.2 billion yen, below the 9.6 billion yen ($76 million) expected by Mitsubishi UFJ Morgan Stanley Securities Co. The brokerage said the results will weigh on shares in the near term, but that long-term growth potential remains unchanged.

Energy Losses

Energy shares led losses in the Topix after oil fell for a third day to below $44 a barrel ahead of data that’s expected to show crude stockpiles expanded in the U.S. Inpex dropped 3.1 percent, while Japan Petroleum Exploration Co. sank 4 percent.

Advantest lost 2.2 percent after reducing its full-year net income forecast by 44 percent. The company blamed a deteriorating environment for sales of non-memory chip test systems and high-profit products. The results weighed on other semiconductor-related companies, including Sumco Corp., which slumped 5.7 percent, and Screen Holdings Co., which fell 1.3 percent.

Retailers advanced, aided by Seven & i’s 3.2 percent gain. Activist investor Daniel Loeb’s Third Point acquired a stake in the company and called for reforms in its supermarket division, Kyodo reported. The stake is less than 5 percent, the Nikkei newspaper reported.

E-mini futures on the Standard & Poor’s 500 Index dropped 0.1 percent after the underlying gauge slipped 0.2 percent on Monday following four weeks of gains. The index is on track for its best month since 2011 after surging 11 percent from its August low.

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