Japan’s Nikkei share average fell on Friday, dragged down by overnight losses in US and Euro zone stocks, with sentiment subdued ahead of key events next week such as the Federal Reserve policy meeting. The Nikkei lost 0.5 percent in mid-morning trade. The index, buffeted through much of the week by a stronger yen, was on track for a 0.3 per cent weekly loss.
“European and US stocks slipped, bond yields fell and crude oil dropped overnight. They were not substantial developments but have contributed to the ‘risk off’ mood for the time being,” said Masahiro Ichikawa, senior strategist at Sumitomo Mitsui Asset Management in Tokyo.
The Fed holds a policy meeting through June 14-15, while the Bank of Japan concludes its two-day policy meeting on June 16.
“The market has mostly priced in the possibility of the Fed not hiking interest rates next week and focus is now on Fed Chair (Janet) Yellen’s policy views,” Ichikawa said.
Five of 23 analysts surveyed by Reuters between June 2 and June 7 said the BOJ would expand its stimulus at next week’s meeting, while 16 believed the BOJ was most likely to ease again in July when it issues its latest economic and prices outlook.
Exporters were given a breather as the yen weakened slightly against the dollar. Toyota Motor Corp nudged up 0.3 percent and Mazda Motor Corp inched up 0.1 percent, while Sony Corp added 0.2 per cent.
Dai-ichi Life Insurance Co dropped as much as 2.5 per cent after Nomura Securities downgraded the insurer’s stock rating to “neutral” from “buy”. Ashimori Industry Co and Kanemitsu Corp surged by as much as 19.5 per cent and 18.7 per cent, respectively, after the Nikkei business daily reported that the automotive parts manufacturers would reinforce production of airbags.
Small cap stocks, considered less vulnerable to next week’s big macro events, continued to garner bids. The Tokyo Stock Exchange’s “Mothers market” for start-ups rose 0.2 percent, adding to a 0.6 per cent gain on Thursday, when it brushed a 3-1/2-week high.
The broader Topix fell 0.6 percent and the JPX-Nikkei Index 400 lost 0.7 percent.