Taiga Uranaka / Reuters
Tokyo: Japan’s Nikkei average fell 1.2% extending losses into a third day to a nearly one-month low, led down by blue-chip exporters like Toyota Motor Corp. This came after sharp losses on Wall Street on rising oil prices.
Financial shares such as Mitsubishi UFJ Financial Group were under pressure after warnings of more mortgage-related write-downs at US banks.
“There are worries about additional mortgage-related losses at US financial institutions,” said Kenichi Hirano, operating officer at Tachibana Securities.
“Compared with US and European markets, the Tokyo market is not cheap anymore in terms of valuations. So, when Wall Street falls, it puts downward pressure on Tokyo,” he said.
The Dow industrial average on 20 June closed at its second-lowest level this year and below 12,000 for the first time since 17 March.
Two Wall Street investment banks cut their earnings estimates for top US home finance companies Fannie Mae and Freddie Mac, citing persistent erosion in US housing and mortgage credit.
“Many investors are holding off until they see what the Fed has to say after the FOMC,” said Masayuki Otani, chief market analyst at Maruwa Securities.
The Federal Reserve meets this week and is widely expected to leave the fed funds rate target at 2%, after having slashed it by 3.25 percentage points since September.
The statement accompanying the rate decision will be closely watched for clues on the future course of monetary policy.
Toyota fell 2.4% to 5,280 yen and Mitsubishi UFJ, Japan’s biggest bank, fell 1.6% to 989 yen.
Solar cell-related shares bucked the market downdraft, helped by media reports of possible government incentives to spur solar power generation.
Solar-cell production equipment makers Ulvac Inc jumped 7.8% to 4,430 yen and NPC Inc gained 4.1% to 6,360 yen.
Maruwa’s Otani said production equipment makers are better positioned than solar-cell manufacturers like Kyocera Corp, as the former also supply Chinese solar-cell makers.
“Chinese makers are very active in capital investment to expand production,” he said.
Kyocera fell 0.4% to 10,450 yen. Sharp Corp, another major solar panel player, rose 1.4% to 1,741 yen.
The Japanese government will come up with measures on 24 June to promote household use of solar power generation systems by introducing subsidies and tax breaks from next year, the Nikkei financial daily reported.
Precision equipment maker Olympus Corp climbed 1.7% to 3,570 yen after Credit Suisse raised its rating on the firm to “outperform” from “neutral”, citing an improvement in foreign exchange rates from a previous forecast in which the dollar was assumed at 100 yen compared with 105 yen at present.
Trade was light, with some 835 million shares exchanging hands compared with last week’s morning average of 919 million.