The extended bull run that has taken Japanese stocks close to seven-year highs ended on Tuesday morning as light profit taking and interest rate uncertainty weighed on the benchmark indexes.
With the Bank of Japan's delicately poised interest rate decision due Wednesday and with economists unsure which way the central bank will jump, investors opted for what one Nomura broker described as "safety in hiatus."
The opaqueness of the forthcoming decision weighed on major banking stocks, which last week soared on strong gross domestic product numbers. But with political wrangles and other economic evidence threatening to push back the BoJ's rate hike, the banks may now face a long summer with no interest rate rises to pad profits.
Shares of Mitsubishi UFJ Financial Group, the country's biggest financial group, fell 0.67 per cent to Y1.49m. The Nikkei 225 Index tumbled 98.71 points, or 0.55 per cent, to end the morning at 17,841.38. The broader Topix Index, which had on the previous day approached a 15-year high, retreated slightly, shedding 0.62 per cent to hit 1,768.84.
The continuing M&A theme moved shares in the steel and autos sectors. Nippon Steel rose 1.18 per cent to Y774 after revealing that it had raised its stake in Nakayama Steel Works to 8.73 per cent.
Expectations of further consolidation in the industry drove shares of Japan Steel Works 4.42 per cent higher to Y1,180 while Sumitomo Metal Mining climbed 2.09 per cent to close at 1,854.
Word that Volvo (NASDAQ:VOLVY) had agreed to take over Nissan Diesel Motor for $1.1bn in an offer that valued the shares at Y540 touched off a deluge of "buy" orders at Y523 that caused trading in Nissan Diesel to be suspended. |
