Japanese shares declined from a four-month high, joining a global selloff, as concerns over higher U.S. interest rates and weak earnings season stalled a drop in the yen.
The Topix index fell 0.5 percent as of 9:52 a.m. in Tokyo Wednesday, with financial stocks and exporters dragging the measure down the most. The yen traded at 103.62 per dollar as corporate earnings in the U.S. weighed on the greenback. Oil fell from its highest level in more than a year after Russias largest producer said it wont cut output, casting doubt over the nations willingness to join OPEC efforts to stabilize prices.
U.S. shares have fallen, overseas markets are a little risk-off, said Chihiro Ohta, a Tokyo-based senior strategist at SMBC Nikko Securities Inc. The yen has also been pushed back to mid-103 today from 104 per dollar. When youve come this far, its easier to see profit-taking in oil.
Investors sold global risk assets as they await September meeting minutes from the Federal Reserve, due on Wednesday, for evidence Chair Janet Yellen is under pressure from hawkish officials to tighten policy soon. Odds of a U.S. rate hike by year-end have ticked up to 67 percent, amid speculation the recent surge in oil prices will fuel inflation.
Demand for riskier assets was also damped after Alcoa Inc. tumbled after positing earnings that missed estimates, while Illumina Inc., a maker of genetic-sequencing machines, said sales were lower than expected. The disappointing corporate results helped send the S&P 500 Index down 1.2 percent on Tuesday. Futures on the S&P 500 Index added 0.1 percent.
Crude held above $50 after falling 1.1 percent Tuesday. Russian oil producer Rosneft PJSC said it wont reduce output, according to Reuters. President Vladimir Putin had earlier said his nation would join the Organization of Petroleum Exporting Countries in freezing or cutting supply.
Exporters, which are sensitive to gains in the yen, were the biggest drags on the Topix, while banks also weighed on the gauge. Sumitomo Mitsui Financial Group Inc. dropped 2.3 percent, while Toyota Motor Corp. declined 0.7 percent.
Hisamitsu Pharmaceutical Co. slumped 5.3 percent after it said first-half operating profit fell 11 percent from a year earlier.
Read more: www.bloomberg.com