Japan Shares Slide After Biggest Weekly Advance in Three Weeks

  • Apple suppliers lead drop on concerns about iPhone 7 sales
  • Topix is heading for biggest quarterly gain this year

Japanese shares slipped from their biggest weekly gain in three weeks as Apple Inc. suppliers dropped and bank stocks weighed on the benchmark equity measure.

The Topix index fell for a second day at the close in Tokyo. The gauge jumped 2.9 percent last week after the Bank of Japan shifted the focus of its monetary stimulus away from a rigid target for expanding the money supply to controlling the shape of yields across different maturities. The Topix is on course for a 7.2 percent advance this quarter, its best such performance this year. The yen, which gained 1.4 percent against the greenback after the policy announcement, has traded between 100.1 to 101.2 per the dollar since then.

SecurityPercent ChangePrice
Topix-1%1,335.84
Nikkei 225-1.3%16,544.56
Yen-Dollar+0.1%100.91

“The market has yet to assess the impact of the BOJ’s monetary policy,” said Mitsuo Shimizu, a deputy general manager at Japan Asia Securities Group Ltd. in Tokyo. “It’s hard for the yen to weaken from current levels as it’s still unclear how the BOJ intends to implement its new policies, and the direction for the stock market remains uncertain.”

The BOJ last week said it will keep the benchmark rate for a portion of bank reserves at minus 0.1 percent, while its monetary base target, which previously had been set at annual increases of 80 trillion yen ($793 billion), may now fluctuate in the short term as policy makers seek to control the yield curve. The control of the yield curve will give the BOJ more flexibility with its bond purchase program, Governor Haruhiko Kuroda said in a public speech in Osaka Monday.

“Even after confirming both the U.S. and Japanese monetary policy frameworks, we lack a clear trend in the market,” said Tatsunori Kawai, a market strategist at Kabu.com Securities Co. in Tokyo. “For the day, Japanese stocks are reacting to negative factors like the yen strength and weaker oil prices.”

Crude prices recouped some of a slump on Friday amid indications Saudi Arabia will agree to cut output to January levels when OPEC members and Russia meet Wednesday in Algiers.

Volume on the Topix was 10 percent below the 30-day average, with more than twice the number of shares falling for each that rose.

  • Apple Inc. suppliers slumped following a report suggesting the new iPhone 7 may not sell as well as its previous model. Japanese component makers TDK Corp. fell 6.3 percent, Alps Electric Co. lost 4 percent, and Murata Manufacturing Co. slid 3.3 percent.
  • Japan Display Inc. sank 7.4 percent. The panel maker, which is also an Apple supplier, asked banks for tens of billions of yen in loans to secure its cash position as its business environment deteriorates, Kyodo newswire reported, without citing sources.
  • Oil explorers were among the biggest decliners on the benchmark equity measure, with the Topix Mining Index falling 2.3 percent after crude prices fell on Friday by the most since July. Inpex Corp. lost 2.3 percent. 
  • Hiday Hidaka Corp. surged 2.3 percent, rising for a fifth day. The restaurateur may post a 4 percent increase in operating profit for the half year ended August, the Nikkei newspaper reported.

Futures on the S&P 500 Index fell 0.2 percent ahead of the first general election debate of the 2016 U.S. presidential campaign between Hillary Clinton and Donald Trump. The underlying gauge slid 0.6 percent on Friday.

The Japanese currency strengthened for three consecutive weeks against the dollar amid the outlook for continued loose monetary policy in the U.S. The Federal Reserve last week refrained from lifting interest rates and scaled back expectations for rate increases going forward.

“For this week, the U.S. election debate between Trump and Clinton will have more implications on the dollar-yen than the Federal Reserve’s recent policy decision,” said Masahiro Ichikawa a Tokyo-based senior strategist at Sumitomo Mitsui Asset Management Co. “A preference toward Trump, for example, may spur a weaker bias on the dollar as he has big plans for tax cuts,” which will trigger concerns over the U.S. economy’s budget deficit, he said.

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