Technology Stocks Lead Japan Market Lower as Volatility Rises

(Bloomberg) -- Stocks in Japan declined, led by electronic makers and technology companies, following the biggest selloff on the S&P 500 Index in six weeks as investors assessed the prospects that central banks worldwide are turning hawkish.

Nintendo Co., SoftBank Group Corp. and Sony Corp. were among the biggest drags on the Topix index. A gauge that measures fluctuations in Nikkei 225 Stock Average constituents jumped 16 percent, the most in three months, after volatility in U.S. equities surged as much as 51 percent on Thursday when the yield on the 10-year Treasury note topped 2.29 percent for the first time in a month. The dollar remained weaker against the yen into a third day.

“It’s difficult for investors to take on risk as U.S. shares show volatile moves day after day,” said Yutaka Miura, a senior technical analyst at Mizuho Securities Co. in Tokyo. “U.S. long-term yields are rising with a lack of clarity on where the U.S. economy is going, and we’re seeing growth stocks being sold and value shares being bought.”

Japan’s core consumer prices crept higher for a fifth straight month to 0.4 percent in May from a year earlier, but inflation remains far from the Bank of Japan’s 2 percent target, government data showed Friday. Industrial production slipped 3.3 percent last month compared with April, more than economists forecast, while the jobless rate unexpectedly climbed.

While Friday’s decline pared the Topix index’s weekly gain to less than 0.1 percent, it still rose 2.8 percent in June, its best monthly performance this year. The benchmark gauge ended the quarter 6.6 percent higher, bouncing back from a decline in the first three months of 2017.

Summary

• Topix -0.8% to 1,611.90 at close in Tokyo
• Nikkei 225 -0.9% at 20,033.43
• Yen +0.1% to 112.02 per dollar
• Sumitomo Chemical +3%; OLED materials growth cited
• Hitachi Metals +3%; Goldman upgrades on steel growth potential
• The 77 Bank +1.8%, Resona Holdings +0.9%, Shinsei Bank +1.6%
• Tokyo Electron -0.9%, after dropping as much as 4.8%; CS sees ‘dearth’ of near-term positives
• Nikon -2.4%; reported consolidated operating profit for year ended March 31 -98% y/y to 774m yen
• Nexon -4%; JPMorgan cuts rating to underweight, says stock is overpriced given increasing dependence on Dungeon & Fighter game in China
• Honeys -4.2%; reported consolidated operating profit for year ended May 31 -21% y/y to 2.3b yen

For more on Japan markets:
Soft Cheese Bogs Down Abe’s Bid to Be Free Trade Champion (1)
Japan Gas Buyers Prepare to Revisit Deals Armed With Ruling (1)
Japan Waits and Waits for Pay Surge From Tight Labor Market
Goldman Predicts Japanese Stocks Drop on Policy Uncertainty (2)
Hedge Fund Renaissance Picks Winner as Japan Stock Surges 1,755%

--With assistance from Yuko Takeo

To contact the reporters on this story: Livia Yap in Singapore at lyap14@bloomberg.net, Hiroyuki Sekine in 東京 at hsekine@bloomberg.net.

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