Japan’s Topix Retreats After Six Day Rally as Nintendo Slumps

  • Nintendo falls most in five years and steelmakers decline
  • S&P 500 dropped from a record as investors weigh earnings

Japanese shares declined, with the Topix index breaking its longest winning streak in nine months, as exporters and banks slumped while Nintendo Co. dropped the most in five years.

The Topix lost 0.1 percent to 1,330.75 at the close in Tokyo after rising for six straight days. The gauge pared declines of as much as 0.9 percent in afternoon trading. The Nikkei 225 Stock Average lost 0.3 percent after trading 5.9 percent above its 25-day moving average on Tuesday. Nintendo fell following a surge of more than 120 percent on the back of a worldwide craze for Pokemon Go.

“Considering there aren’t any real catalysts for share moves and that the Nikkei 225 has risen far above its 25-day moving average, the market needs a breather,” said Chihiro Ohta, a senior strategist at SMBC Nikko Securities Inc. in Tokyo. “Nintendo shares need a break too.”

The Topix rallied 8.9 percent last week, its best performance since 2009, as the yen dropped more than 4 percent. Equities have climbed after Prime Minister Shinzo Abe’s win in the upper-house elections raised optimism the government will act to boost growth. The International Monetary Fund on Tuesday downplayed the need for Japan to weaken its currency to boost economic growth and inflation before a Bank of Japan policy meeting next week.

The IMF scrapped its forecast for a pickup in global growth this year, citing Britain’s vote to leave the European Union. The fund sees Japan’s economy expanding 0.3 percent in 2016, down 0.2 percentage point from April’s projection, as a strengthening yen wipes out the benefits of a delay in increasing the nation’s consumption tax.

All but thirteen of the Topix’s 33 industry groups fell. The Topix Other Products Index, which counts Nintendo as its biggest member, led declines. 

  • Nintendo slumped 13 percent to be the biggest drag on the Topix. Tomy Co., a toymaker which had also advanced amid the Pokemon Go rally, lost 9.5 percent. Bank of Kyoto Ltd., the fifth-biggest Nintendo investor, lost 5 percent.
  • McDonald’s Holdings Co. (Japan) surged 9.8 percent. The fast-food restaurant operator will be a sponsor of Pokemon Go in Japan, making its restaurants key locations for game players, the Wall Street Journal reported.
  • Ricoh Co. fell 3.5 percent after subsidiary Ricoh India said some of its accounts were falsified, and unaudited estimates for losses for the financial year ended March 31 were at about 11.23 billion rupees ($167 million).  
  • JFE Holdings Inc. was among the biggest losers on the Nikkei 225, declining 4 percent as steelmakers slumped.

Futures on the S&P 500 Index were little changed on Wednesday. The underlying index fell 0.1 percent on Tuesday, slipping from a record, as investors were circumspect on the prospects for further gains following a mix of corporate earnings reports.

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