The Nikkei average fell 1.08 percent on Wednesday to its lowest close in a month as Softbank Corp fell ahead of announcing its latest earnings while investors sold stocks amid caution ahead of the final outcome of US midterm elections.
Concerns about rising interest rates drove Sumitomo Realty & Development Co Ltd and other property stocks lower, and weak earnings results from Aiful Corp spurred selling in consumer finance companies. "Investors are selling stocks for now. They are concerned how US stocks will do after the outcome of the US elections," said Hiroyuki Fukunaga, chief strategist, research division at Rakuten Securities.
Democrats swept Republicans from power in the US House of Representatives and gained seats in the Senate in Tuesday's voting.
The Nikkei lost 177.67 points to 16,215.74, the lowest close since October 4. The broader TOPIX index fell 1.19 percent to 1,597.50. Data showed that the diffusion index of leading economic indicators stood at a preliminary 20.0 in September, the third straight month in which the index had been below 50.
A reading below 50 suggests an economic contraction in the months ahead, while a reading above 50 suggests an expansion. "Recent macro data is showing weakness in the economy, and investors taking that into account shy away from the market," said Yoshihisa Okamoto, senior vice president at Fuji Investment Management.
With an absence of buyers, the cash market was also dragged down by falls in the futures market where arbitrage-related selling was seen ahead of the settlement of Nikkei options contracts this Friday, Okamoto said.
Investors dumped Softbank, sending its share price down 4.1 percent to 2,340 yen before its earnings. After the market closed, the Japanese Internet and telecoms group said quarterly profit rose nearly eight times from a year earlier after it added earnings from the wireless unit it bought from Vodafone Group Plc this year.
Orix Corp revised up its full-year forecast thanks partly to the proceeds from the sale of shares in Aozora Bank, which will go public on November 14. The company now expects a group net profit of 195 billion yen ($1.66 billion) for the year to next March, higher than its previous projection of 177 billion yen and above the market estimate.
Credit Saison Co Ltd dropped 5.5 percent to 3,940 yen and Takefuji Corp plunged 4.7 percent to 4,250 yen. Olympus Corp fell 3.5 percent to 3,860 yen after Credit Suisse lowered its rating on the stock to "neutral" from "outperform" on Tuesday. Credit Suisse said the latest upward revision was the last of the good news for now, triggering profit-taking.
Bucking the overall bearish trend, Toyota Motor Corp added 1.8 percent to 7,230 yen, after earlier climbing to its all-time high of 7,370 yen. Japan's top automaker posted a 44 percent rise in quarterly profit, raised its full-year forecasts and announced a capital and operational tie-up with Isuzu Motors Izusu Motor leapt 12 percent to 465 yen.
Hino Motors Ltd jumped 3.8 percent to 609 yen after the Nihon Keizai newspaper reported on its Web site on Wednesday that Hino and Isuzu Motors are in talks over forming alliances in four to five areas.
Trade volume shot up to its highest level in four sessions, with 1.82 billion shares changing hands on the Tokyo exchange, as investors looked ahead to the settlement of Nikkei options contracts at the end of this week. Declining shares beat advancers by a ratio of more than eight to one.
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