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Tokyo Shares End Down As Election Results Invite Selling
TOKYO (Dow Jones)--Tokyo stocks fell on Monday as a worse-than-expected election defeat dealt to Japan's ruling coalition over the weekend stoked enough uncertainty to sell equities, offsetting supportive Chinese export data and modest yen weakening.
The Nikkei Stock Average fell 37.21 points, or 0.4%, to 9548.11 following Friday's 0.5% rise. The Topix index of all the Tokyo Stock Exchange First Section issues also fell 3.51 points, or 0.4%, to 857.70, with 22 of 33 subindexes ending in negative territory.
Trading volume was by no means robust, totaling just under 1.6 billion shares.
Stocks opened with moderate losses following stinging defeats by the current ruling Democratic Party of Japan-led coalition in Sunday's Upper House elections, increasing general political uncertainty and clouding the investment outlook somewhat vis-a-vis stocks.
"Investors want to unload their positions for now since all of the DPJ's previous policies on fiscal restructuring and growth strategy will need to be reworked from zero," said Masatoshi Sato senior strategist at Mizuho Investors Securities, noting that new coalition partners will likely have to be sought out. But he added that election-linked selling likely to be short-lived as attention turns to U.S. earnings season and Chinese economic data starting this week.
By midday the market had trimmed its losses, turning positive in the afternoon, aided by the dollar's rise above Y89. An unexpected widening in China's trade surplus for June--illustrated in data released over the weekend--as well as stronger Asian bourses, also provided support for the Japan market.
But profit-taking eventually won out by the end of the session.
Phoenix Securities manager Mamoru Nakajo noted that shares of firms driven by domestic demand were generally weak on concern about consumer spending. He added that the election results cast a pall on the direction of the consumption tax debate in particular.
Heavyweight Fast Retailing was the single largest negative drag on the Nikkei, dropping 1.8% to Y12,570. Several drug maker shares were also lower, with Takeda Pharmaceutical and Astellas off 1.2% to Y3,975, and off 2.6% to Y1,793, respectively.
Technology bellwether Tokyo Electron dropped 1.7% to Y4,830 after posting a three-fold increase in semiconductor manufacturing equipment orders for the April-June quarter. The figures nevertheless disappointed the market.
Obvious weaker yen beneficiaries included Honda Motor, which added 3.1% to Y2,687, and Sony, which gained 3.6% to Y2,532.
Steel shares were one of the best performing sectors in posting a 2.0% gain, thanks largely to the strong China data. Nippon Steel added 2.3% to Y308. Traders said that while short covering was seen today, the stocks have upside as they have been excessively sold of late. Plenty of caution remains before companies announce quarterly earnings at the end of the month, however, as price hikes in raw materials are expected to weigh on bottom lines.
Energy developer Inpex gained 5.4% to Y437,500 after Friday's 13% sell-off following the firm's announcement of a highly dilutive equity capital increase plan.
September Nikkei 225 futures closed down 30 points, or 0.3%, at 9550 on the Osaka Securities Exchange.
The Nikkei Stock Average fell 37.21 points, or 0.4%, to 9548.11 following Friday's 0.5% rise. The Topix index of all the Tokyo Stock Exchange First Section issues also fell 3.51 points, or 0.4%, to 857.70, with 22 of 33 subindexes ending in negative territory.
Trading volume was by no means robust, totaling just under 1.6 billion shares.
Stocks opened with moderate losses following stinging defeats by the current ruling Democratic Party of Japan-led coalition in Sunday's Upper House elections, increasing general political uncertainty and clouding the investment outlook somewhat vis-a-vis stocks.
"Investors want to unload their positions for now since all of the DPJ's previous policies on fiscal restructuring and growth strategy will need to be reworked from zero," said Masatoshi Sato senior strategist at Mizuho Investors Securities, noting that new coalition partners will likely have to be sought out. But he added that election-linked selling likely to be short-lived as attention turns to U.S. earnings season and Chinese economic data starting this week.
By midday the market had trimmed its losses, turning positive in the afternoon, aided by the dollar's rise above Y89. An unexpected widening in China's trade surplus for June--illustrated in data released over the weekend--as well as stronger Asian bourses, also provided support for the Japan market.
But profit-taking eventually won out by the end of the session.
Phoenix Securities manager Mamoru Nakajo noted that shares of firms driven by domestic demand were generally weak on concern about consumer spending. He added that the election results cast a pall on the direction of the consumption tax debate in particular.
Heavyweight Fast Retailing was the single largest negative drag on the Nikkei, dropping 1.8% to Y12,570. Several drug maker shares were also lower, with Takeda Pharmaceutical and Astellas off 1.2% to Y3,975, and off 2.6% to Y1,793, respectively.
Technology bellwether Tokyo Electron dropped 1.7% to Y4,830 after posting a three-fold increase in semiconductor manufacturing equipment orders for the April-June quarter. The figures nevertheless disappointed the market.
Obvious weaker yen beneficiaries included Honda Motor, which added 3.1% to Y2,687, and Sony, which gained 3.6% to Y2,532.
Steel shares were one of the best performing sectors in posting a 2.0% gain, thanks largely to the strong China data. Nippon Steel added 2.3% to Y308. Traders said that while short covering was seen today, the stocks have upside as they have been excessively sold of late. Plenty of caution remains before companies announce quarterly earnings at the end of the month, however, as price hikes in raw materials are expected to weigh on bottom lines.
Energy developer Inpex gained 5.4% to Y437,500 after Friday's 13% sell-off following the firm's announcement of a highly dilutive equity capital increase plan.
September Nikkei 225 futures closed down 30 points, or 0.3%, at 9550 on the Osaka Securities Exchange.
-By Brad Frischkorn, Dow Jones Newswires; 813-6269-2779; radford.frischkorn@dowjones.com
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