Japan Shares Poised for Worst Week Since Mid-April as Yen Gains

  • Yen jumps on report BOJ re-calibrating tapering communications
  • Japan’s first-quarter annualized GDP growth misses estimate

Japan's Growth Slower Than Initially Thought

Investor sentiment for Tokyo equities took a hit Thursday following Japan’s disappointing growth figures and a report on the Bank of Japan, putting the Topix index on track for its worst week in almost two months.

The benchmark stock gauge extended the week’s loss to 1.4 percent, the steepest slide since a 2.1 percent weekly decline in mid-April. The yen rose 0.3 percent to 109.54 per dollar after the BOJ was said to be re-calibrating its communications about how to handle a future exit from monetary stimulus. Earlier in the day, finalized gross domestic product figures for Japan’s first quarter showed annualized growth of 1.0 percent, missing economists’ estimate for 2.4 percent growth.

“The yen is having a hard time calming down,” said Hideyuki Suzuki, a general manager at SBI Securities Co. in Tokyo. “With companies mostly having formulated their business outlook based on a dollar-yen rate of around 108, current levels should be okay but, still, a strong yen doesn’t bode well for local companies.”

The Topix has posted just one daily advance this week as three events, planned for later Thursday, fanned uncertainty: the European Central Bank is scheduled to give its rate decision, former U.S. Federal Bureau of Investigation head James Comey is set to testify before the Senate Intelligence Committee, and Britain votes in a general election.

“The headline GDP figure was half of what was expected, which is a pretty big difference,” said Ayako Sera, a market strategist with Sumitomo Mitsui Trust Bank Ltd. in Tokyo. “Investor sentiment had been improving under the impression that Japan’s first quarter was strong, but the latest data will have people rethinking that. And what Comey says during the question-and-answer session will keep investors wary over the odds of him saying something major.”

Summary

  • Topix -0.4% to 1,590.41 at trading close in Tokyo
  • Nikkei 225 -0.4% at 19,909.26
  • Dentsu -3.2%; May non-consolidated sales fall 6.8% y/y
  • Heiwa Real Estate -4.4%; cut to hold from buy at MUFJ-MS
  • Japan Display -4.7%; Deutsche Bank sees continued problems despite reports on search for capital tie-up
  • Nippon Suisan +7.2%; PT lifted to 980 yen from 810 yen at SMBC Nikko, outperform maintained
  • TDK +3.6%; raised to buy from sell at Citi
  • Toshiba +5.5%; Reuters reports company may pick a preferred bidder for its chip business on June 15
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