Japan Shares Slide on Tech Selloff as North Korea Fires Missile

(Bloomberg) -- Japanese shares fell as a selloff in technology shares continued in Asia and North Korea fired a missile, spurring gains in the yen.

The benchmark Topix index erased an advance of as much as 0.7 percent, led lower by Nintendo Co., SoftBank Group Corp., Sony Corp. and Panasonic Corp. Chief Cabinet Secretary Yoshihide Suga said the rocket may have fallen into waters that include Japan’s Exclusive Economic Zone. North Korea said after the market closed that it was an intercontinental ballistic missile. It had earlier said it would make an “important announcement” at 3:30 p.m.

Increased caution over North Korea is weighing on investor sentiment, said Ikuo Mitsui, a fund manager at Aizawa Securities Co. The “announcement may also have led to profit taking.”

Nintendo fell 4.5 percent, the biggest drag on the Topix. “When Nintendo declines, it’s easier for investors to become more cautious,” said Toshio Sumitani, a strategist at Tokai Tokyo Research Institute Co., pointing out that the gamemaker was a driving force behind the Nikkei 225 rising above 20,000.

Automakers rose despite gains in the yen, providing the biggest boost to the Topix. Demand for profitable light trucks gave Ford Motor Co. and top Japanese carmakers better sales than analysts had estimated for June following a five-month streak of industry declines. Toyota Motor Corp. added 1.9 percent, after its June U.S. auto sales climbed 2.1 percent, beating estimates. Honda Motor Co. rose 2 percent.

“The fact that the missile may have landed in Japan’s EEZ hurts a bit,” said Ryuta Otsuka, a strategist at Toyo Securities Co. in Tokyo. That said, “automakers appear to be doing well lately, and reflecting the stability in the U.S. economy.”

Summary

• Topix -0.3% at 1,609.70 at the close in Tokyo
• Nikkei 225 -0.1% at 20,032.35
• SoftBank -1.4%, Sony -1.7%, Panasonic -2.2%
• Yen +0.3% at 113.00 per dollar after weakening 0.9% on Monday
• Idemitsu -11%; to raise as much as 138.5b yen via public share sale

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