Japanese Stocks Fall as Yen's Appreciation Weighs on Exporters

(Bloomberg) -- Japanese exporters weighed on the Topix index as the yen strengthened against the dollar while investors assessed minutes of the Federal Reserve’s June meeting.

Automakers and machinery companies were among the biggest drags on the benchmark gauge after minutes showed Fed officials continued to view gradual interest-rate increases as appropriate while starting the process of unwinding their $4.5 trillion balance sheet this year. Banks including Sumitomo Mitsui Financial Group Inc. and Mitsubishi UFJ Financial Group Inc. dropped after U.S. Treasury yields declined in New York. Energy explorers slid after crude oil had its biggest daily loss in four weeks on Wednesday.

“Investors are watching what the yen does,” said Yoshihiro Ito, chief strategist at Okasan Online Securities Co. in Tokyo. “The industries that were on their way to being reassessed and bought such as automakers and semiconductor producers are being sold off again.”

“It’s difficult to move enthusiastically on Japanese stocks at the moment,” said Juichi Wako, a senior strategist at Nomura Holdings Inc. in Tokyo. “The Fed minutes didn’t show further details on the timing for shrinking the balance sheet, and investors probably want to gauge U.S. data from today onward.”

Summary

• Topix -0.2% to 1,615.53 at the close in Tokyo
• Nikkei 225 -0.4% to 19,994.06
• Yen +0.1% to 113.12 per dollar
• Honda Motor Co. -1.5%, Mitsubishi Motors Corp. -2.4%
• Construction stocks provide most support to Topix; investors may be buying on possible demand for building and infrastructure works following heavy rains on Kyushu Island: Toyo Securities
  • Kajima +3.9%
  • Shimizu +2.5%
  • Taisei +2.2%
  • Obayashi +1.7%
  • Daito Trust Construction +1.3%
• Askul +6.6%; co. said to form partnership with Seven & I for distribution
• Aeon Co. +2.5%; swings to 1Q net income of 3.7b yen from loss of 6.3b yen a year ago; maintains full-year forecast at 15b yen 
• Benesse +2.5%; upgraded to neutral at Daiwa, PT raised to 4,300 yen
• United Super Markets Holdings -7.6%; 1Q operating profit -25% y/y to 2.7b yen, maintains full-year forecast at 14.8b yen

For more on Japan markets:
Japan’s Economy Gains Momentum in Struggle to Escape Deflation
EU, Japan Reach ‘Political’ Accord on Trade Ahead of Summit (1)
Japan’s Yen Bond Sales Surge as Corporates Lock in Cheap Funding
Japanese Funds Sell Most Foreign Debt in 10 Weeks, MOF Data Show

To contact the reporters on this story: Yuko Takeo in Tokyo at ytakeo2@bloomberg.net, Nao Sano in Tokyo at nsano3@bloomberg.net.

To contact the editors responsible for this story: Divya Balji at dbalji1@bloomberg.net, Jonathan Annells, Naoto Hosoda