Japanese Shares Fall on Low Volumes as Commodity Stocks Decline

(Bloomberg) -- Japanese shares fell for the first time in three days in thin trading as commodity producers declined following a slump in crude, while metal prices and the yen gained.

Raw material miners and producers including Inpex Corp. and Nippon Steel & Sumitomo Metal Corp. closed lower in Tokyo, while power generators advanced. Oil posted its biggest loss in three weeks on Monday on concern that increased Iraqi exports will compound a global oversupply of crude. Copper, lead and other metals also declined in London.

Volume on the Topix index was 21 percent lower than the 30-day average as investors awaited a speech by Federal Reserve Chair Janet Yellen later this week at Jackson Hole, Wyoming. Her talk follows hawkish comments from Fed Vice Chairman Stanley Fischer and New York Fed President William Dudley.

“With investors waiting for Yellen, it’s unlikely that we’ll see a strong direction in the stock market,” said Toshihiko Matsuno, a senior strategist at SMBC Friend Securities Co. in Tokyo. Still, “oil, which had been rebounding, has started to correct again,” dragging down commodity related shares, he said.

Insurers and commodity related stocks fell the most on the Topix. Exporters such as electric-appliance makers and car manufacturers were the biggest drags among industry groups on the gauge.

• Chugoku Electric Power Co. added 2.2 percent, while oil explorer Inpex fell 2.2 percent.
  
• Semiconductor parts maker Sumco Corp. sank 6 percent, posting the largest drop on the Nikkei 225.
• Drugmakers were the second-biggest gainers on the Topix as Ono Pharmaceutical Co. surged 5.8 percent. The firm will start selling its Opdivo cancer drug to treat blood cancer this year, the Nikkei newspaper reported, citing President Gyo Sagara. 
• Suit maker Aoyama Trading Co. rose 2.6 percent after announcing share buybacks worth up to 2 billion yen ($20 million).
  

Futures on the S&P 500 Index were little changed. The underlying measure dropped 0.1 percent on Monday as declines in commodity shares led by falling oil prices offset a rally in drugmakers spurred by deal activity. West Texas Intermediate crude for October delivery dropped 1 percent to $46.92 a barrel after losing 3 percent on Monday.

The Topix has retreated 16 percent this year through Monday, placing the benchmark gauge as the second-worst performer among developed markets. Investors continue to seek clues on whether the Bank of Japan will add to its already record stimulus measures, and on the timing of the next U.S. interest rate hike.

The Bank of Japan almost doubled its amount of annual ETF purchases to 6 trillion yen during its last policy meeting, increasing speculation among investors that the market will advance in the afternoon as the central bank steps in to buy stocks on days where shares have fallen during morning trading.

“It’s hard for investors to plunge significantly into shorts,” said Ichiro Yamada, general manager of equities at Fukoku Mutual Life Insurance Co. in Tokyo.

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: Jeff Sutherland at jsutherlan13@bloomberg.net, Anna Kitanaka, Andrew Janes