Japan Stocks fall ahead of central bank meetings

Headline indices of the Japan share market declined on Monday, 30 July 2018, tracking losses seen on Wall Street last session on Friday on lower-than-expected US growth data. Meanwhile, selloff pressure intensified on caution ahead of the policy statement of the Bank of Japan's two-day meeting due on Tuesday and the Federal Reserve's meeting later this week. Among TSE33 issues, 20 issues declined, while 13 issues inclined, with shares of Electric Power & Gas, Oil & Coal Products, Services, Foods, Machinery, and Pharmaceutical issues being notable losers, while Rubber Products, Banks, Mining, and Marine Transportation issues were notable gainers. At closing bell, the benchmark Nikkei 225 index declined 0.74%, or 167.91 points, to 22,544.84. The broader Topix index of all First Section issues on the Tokyo Stock Exchange, meanwhile, dropped 0.43%, or 7.61 points, to 1,768.15.

Wall Street took a hit at the end of last week after major technology firms' earnings reports missed estimates, which led to sharp declines in other stocks. The Dow fell 76.01 points or 0.3% to 25,451.06, the Nasdaq plunged 114.77 points or 1.5% to 7,737.42 and the S&P 500 slid 18.62 points or 0.7% to 2,818.82.

Investors are closely watching the Bank of Japan's two-day meeting starting Monday, with widespread speculation about whether the central bank may be looking to alter its ultra-loose monetary policy. The BoJ has engaged in massive bond-buying as part of a programme to push the country's inflation rate up to 2.0%, seen as necessary to turbo charge the world's third-largest economy.

The US Federal Reserve meets on Tuesday and Wednesday and is widely expected to stand pat while reaffirming the outlook for further gradual rate rises. The market is almost fully priced for a hike in September and leaning toward a further move before year-end.

The major exporters were mostly lower, with Sony Corp, Panasonic Corp, and Mitsubishi Electric were lower in a range of 0.1% to 1%.

In the auto space, Toyota was up 0.4% and Honda rose 0.3%. In the banking sector, Mitsubishi UFJ Financial was up almost 2% and Sumitomo Mitsui Financial was higher by more than 1%.

ECONOMIC NEWS: Preliminary data released Monday by the Ministry of Economy, Trade and Industry (METI) showed that retail sales rose 1.8% on year in June 2018. The pace of growth accelerated from +0.6% in May. The increase was supported by recent gains in the prices for food and beverages as well as fuels, compared to year-earlier levels. Sales of fuels accelerated to +16.7% y/y in June from +13.7% in May while those of food and beverages rose 1.5% y/y in June after +0.7% in May. On the month, retail sales rose 1.5% on a seasonally adjusted basis in June, the first rise in two months after -1.7% in May.

CURRENCY NEWS: The Japanese yen was tad stronger against U.S. dollar on Monday on softer-than-expected US GDP data and ahead of central bank meetings. The dollar was quoted at 110.94-95 yen compared with 110.97-111.07 in New York and 111.02-04 yen in Tokyo on Friday.

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