Japan Stocks Weaken Ahead of BOJ Policy Meeting
Shares in Tokyo fell as market players anticipate a decision on monetary policy from the Bank of Japan this week and evaluate corporate earnings results. Nintendo Co. dropped after disclosing that the financial impact of its Pokemon Go product will be limited.
The Topix index fell 0.2 percent to 1,325.36 at the close in Tokyo after gaining as much as 0.9 percent, while the Nikkei 225 Stock Average was little changed. The Bank of Japan is widely anticipated to boost stimulus at the end of a two-day meeting on July 29, with a staggering majority of economists projecting further easing. The Federal Reserve also gathers this week to provide its decision on interest rates.
“The market is bracing for the BOJ’s policy decision,” an analyst stated. “There have been occasions in the past where the market rises on expectations and then there’s disappointment and stocks are sold off. I doubt we’ll see anything new.”
The S&P 500 Index climbed to fresh record highs on Friday amid positive earnings results. Traders also keep an eye on Japanese earnings, with a couple of companies reporting set to peak this week. SoftBank Group Corp., Sony Corp., and Panasonic Corp. are some of the companies scheduled to post results.
Updates on the Japanese Currency
The yen traded little changed at 106.13 per dollar on Monday after dropping 0.3 percent on Friday. Outlook for additional monetary easing from the central bank weakened the yen after it rose to more than 100 per dollar following Britain’s decision to leave the European Union in June.
On the other hand, Japanese exports plunged 7.4 percent last month from a year earlier, beating economists’ forecast for a 11.3 percent dive. The country had a trade surplus of 1.81 trillion yen in the January-June period, marking the first surplus since the second half of 2010.
Nearly twice the number of shares gained amid declines on the Topix. A measure of miscellaneous product manufacturers, which includes Nintendo among its members, led the downtrend.
Futures on the S&P 500 Index dipped 0.1 percent on Monday. The underlying measure soared 0.5 percent on Friday as investors showed confidence that corporate earnings will not hinder the rally.
Several events in the world such as Brexit and terrorist attacks reduced the chance that the Federal Reserve would tighten monetary policy at its meeting this week, with traders now pricing in a 10 percent potential for an interest rate increase, down from 48 percent two months ago.
“With a bunch of events lined up this week, starting with the Federal Open Market Committee and the BOJ meeting, and corporate earnings reports also slated for release, investors are likely to take a wait-and-see approach,” an analyst explained.
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