BUSINESS Tokyo stocks close almost flat as investors eye Fed meeting

BUSINESS

Tokyo stocks close almost flat as investors eye Fed meeting

Xinhua

19:24, March 17, 2021

TOKYO, March 17 (Xinhua) - Tokyo stocks closed essentially flat Wednesday as investors were in a circumspect mood ahead of a U.S. Federal Reserve policy meeting where indications may be given about the central bank's moves to higher rates earlier than expected.

The 225-issue Nikkei Stock Average shed 6.76 points, or 0.02 percent, from Tuesday to close the day at 29,914.33.

The broader Topix index of all First Section issues on the Tokyo Stock Exchange, meanwhile, added 2.53 points, or 0.13 percent, to finish at 1,984.03.

Local brokers said that while sentiment towards Japanese issues remained reasonably positive due to hopes for the global economic recovery as vaccination campaigns gather steam worldwide, recent increases in U.S. bond yields have sparked concerns about the rising costs of borrowing for corporations, which could further impact risk appetite towards equities.

In a day of cautious trading, investors' focus shifted to the outcome of a U.S. Federal Reserve meeting later in the day amid speculation the central bank may signal that its rates may hike as the global economy continues to show signs of recovery from the downside effects of the COVID-19 pandemic, with vaccine rollouts expanding daily.

"Market participants are speculating Fed officials may signal a rate hike in 2023 amid growing signs of global economic recovery from the fallout of the coronavirus pandemic and progress in COVID-19 vaccine rollouts," Koichi Fujishiro, a senior economist at the Dai-ichi Life Research Institute, was quoted as saying.

"If the Fed signals such a shift, U.S. yields would rise and negatively affect stock markets," Fujishiro added.

Investors are also eyeing with interest the outcome of a Bank of Japan (BOJ) meeting later in the week to see if the BOJ decides to dispense with its current target for exchange-traded fund (ETFs) purchases.

"If there is any disappointment in reaction to the BOJ, it won't last long," Takashi Hiroki, chief strategist at Monex Securities, was quoted as saying.

"Japanese stocks have proven that they don't need the BOJ to buy ETFs to rise sharply. Once we reach April a lot of new money will enter the stock market," Hiroki continued.

By the close of play, mining, and iron and steel issues led notable decliners, while pharmaceutical and real estate issues comprised those that gained the most.

Technology issues found favor following their U.S. peers advancing overnight, with Shin-Etsu Chemical rising 1.0 percent, while Advantest added 1.6 percent.

Pharmaceutical issues also found traction, with Daiichi Sankyo Co. Ltd. adding 1.8 percent, while Takeda Pharmaceutical Co. Ltd. added up 2.5 percent.

Among issues falling on individual news, Tokyo Electric Power Company Holdings dropped 10.2 percent, after Japan's atomic regulator found safety breaches at its Kashiwazaki Kariwa nuclear plant.

Honda Motor also skidded down, losing 1.3 percent, after announcing it will halt production at five U.S. and Canadian plants due to a chip shortage creating supply chain problems.

Issues that rose outpaced those that fell by 1,409 to 682 on the First Section, while 104 ended the day unchanged.

On the main section on Wednesday, 1,252.84 million shares changed hands dropping from Tuesday's volume of 1,419.37 million shares.

The turnover on the third trading day of the week came to 2,579.422 billion yen (23,652 billion U.S. dollars).

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