Tokyo: Japan’s Nikkei stock average shed 0.3% in see-saw trade on Wednesday before a US interest rate decision, with investors selling off shares with disappointing earning outlooks such as Fujifilm Holdings Corp
Trading houses such as Mitsubishi Corp also dragged on the market after a fall in commodity prices, while property issues declined after a brokerage downgrade on Japan’s top two property firms, Mitsui Fudosan Co and Mitsubishi Estate Co
But financial shares such as Nomura Holdings Inc, Japan’s biggest brokerage, gained on views the worst of the subprime problems is over and the US central bank may pause its aggressive run of rate cuts.
“Investors don’t have factors for trade before seeing the US market reaction to the Fed decision,” said Yutaka Miura, deputy manager of the equity information department at Shinko Securities.
“Earnings provide some trading news in individual stocks, but they are not good enough to bring up the whole market.”
The Fed is expected to trim rates by a quarter percentage point to 2% on Wednesday, which would take its rate cuts over the past seven months to 3.25 percentage points. Investors also expect a tweaked policy statement indicating the central bank may pause its aggressive run of rate cuts.
The Nikkei average fell 44.38 points to end at 13,849.99.
On Monday, the benchmark broke above 14,000 for the first time since 27 February. Japanese markets were closed on Tuesday for a national holiday.
The broader TOPIX index inched down 0.2% or 3.10 points to 1,358.65.
“Investors bought bank shares because if moves to further cut interest rates stopped, that would be good for the sector,” said Yoshinori Nagano, a chief strategist at Daiwa Asset Management.
“But for that scenario to take place, there should be a sign that the erosion of the US economy will stop soon, and I’m not seeing that at all. The market might have grown too optimistic on that front.”