Japan Stocks Fall Ahead of Yellen as Insurers, Carmakers Slide

  • Fed Chair Yellen due to speak later today in Jackson Hole
  • Japan July core consumer prices fell 0.5 percent on the year

Japanese shares retreated, erasing the benchmark equity index’s gains for the week, as insurers and carmakers led losses before Federal Reserve Chair Janet Yellen’s speech.

Stocks including Toyota Motor Corp. and property insurer Tokio Marine Holdings Inc. slumped Friday in Tokyo. The yen gained against the dollar after data showed Japan’s July core consumer prices fell 0.5 percent on the year. The benchmark equity gauge has been fluctuating on low volume this week as investors await Yellen’s speech later today for clues on the timing of higher U.S. interest rates.

SecurityPercent ChangePrice
Topix         -1.3% 1,287.90
Nikkei 225         -1.2%16,360.71
Yen-Dollar         +0.06%   100.47

Yellen will speak at an annual gathering of central bankers in Jackson Hole, Wyoming, following hawkish comments from Fed Vice Chairman Stanley Fischer and New York Fed President William Dudley last week. Traders see a 57 percent chance that the Fed will raise rates by the end of the year, up from 47 percent a week earlier.

“You can’t take on risk ahead of important events,” said Takashi Ito, a Tokyo-based equity strategist at Nomura Securities Co. “There are two views on what she’ll say; either that she’ll take a step forward in her reference to the rate hike, or she won’t mention it at all. It’s difficult to predict. If she does make more hawkish comments the market could be chaotic in the short term.”

About four shares fell for each that rose on the Topix, with just two of the 33 industry groups advancing.

  • Capcom Co. jumped 5 percent after the gamemaker said it would buy back as much as 3.3 billion yen ($32.9 million) of its shares. Household products maker Kao Corp. also climbed after saying it will buy back shares.
  • Synthetic fiber manufacturer Toyobo Co. posted the second-biggest decline on the Nikkei 225, sinking 4.7 percent after SMBC Nikko Securities Inc. cut its target price on the stock.
  • Steel producer JFE Holdings Inc. advanced 2.7 percent. A gauge of iron and steel makers had the best performance among industry groups on the Topix. 
  • Toyota, the world’s largest automaker, slipped 3.4 percent. Citi downgraded the stock saying recent strength in the yen against European currencies will hurt price competitiveness of vehicles made in Japan. Citi also cut its rating on Mazda Motor Corp., which dropped 1.9 percent.

Futures on the S&P 500 Index were little changed. The underlying measure slid 0.1 percent on Thursday.

The Topix has retreated 17 percent this year, making the benchmark gauge the second-worst performer among developed markets. Investors also continue to seek clues on whether the Bank of Japan will add to its already record stimulus.

“It does appear as if a minority of investors are attempting to bring the market down before Ms. Yellen’s speech,” said Soichiro Monji, general manager for the economic research department at Daiwa SB Investments Ltd. But with the Topix paring gains, “the reality seems to be that traders are trying to create movement in the market but no one is dancing.”

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