Photographer: Noriko Hayashi/Bloomberg

Japanese Shares Including Banks Slide Before FOMC Rate Decision

  • Technology companies finish lower after wiping out early gains
  • Defensive stocks provide biggest support for broader market

Shares in Tokyo including financial stocks edged lower, while defensive equities rose before the Federal Reserve’s rate decision Wednesday.

The Topix index erased earlier gains to finish the day on a weaker note as technology companies failed to stage a rebound following Monday’s selloff. Banks and insurers fell ahead of the Federal Open Market Committee’s decision, which a majority of economists forecast will be a 25 basis point hike. Companies that rely largely on domestic demand -- railways, pharmaceutical firms and retailers -- helped prop up the broader market.

“What matters is the FOMC members’ view on future rate hikes, and the bank’s balance sheet,” said Naoki Fujiwara, chief fund manager of Shinkin Asset Management Co. in Tokyo. “With inflation slowing, they aren’t likely to be in a hurry to tighten, which means the odds are greater for the yen to strengthen than weaken. Then again, low yields and a weaker dollar will be very good for the U.S. economy,” providing mixed cues for Japanese equities, he added.

An equity gauge that includes everything from electronics brands to machinery makers slid for a third day, erasing earlier gains that were fueled by a rebound in the S&P 500 technology index. Toshiba Corp. sank as much as 6.3 percent following an Asahi report saying the company is likely to delay it’s decision on a preferred buyer for its chip business.

Summary

  • Topix -0.1% to 1,591.77 at the close in Tokyo after rising as much as 0.5%
  • Nikkei 225 -0.1% at 19,883.52
  • Yen little changed at 110.02
  • Gauge of technology companies down 0.3% as Toshiba -4%, Nidec -1.6%
  • Ono Pharmaceutical +5.1% after announcing its first buyback in seven years
  • FamilyMart UNY gains 3.6%, Don Quijote +1.8% as companies mull tie-up in retail and distribution
  • Banks and insurers fall: 
    • Mitsubishi UFJ Financial -0.6%, Sumitomo Mitsui Financial -0.9%
    • MS&AD Insurance -1.3%, Dai-ichi Life -1.2%, T&D Holdings -0.7%
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