Tokyo shares fell Thursday as a Bank of Japan (BoJ) policy meeting kicked off, with markets waiting to see if policymakers unleash a fresh round of stimulus to kick-start sluggish growth. The gathering is the BoJ's first since Britain's shock vote to quit the European Union hammered financial markets and sparked a rally in the safe-haven yen, which is threatening to dent Japan Inc's bottom line. Among the options, the BoJ could expand its mammoth asset buying plan or cut interest rates further into negative territory in a bid to stir lending and stoke the wider economy.
The rate plan has been unpopular among Japanese banks, however, as it effectively charges them to keep excess reserves in the BoJ's vaults. The meeting comes after Japan's government on Wednesday announced a whopping 28 trillion yen ($266 billion) stimulus package aimed at boosting growth in the world's number three economy, although it released few details.
Tokyo and the BoJ have come under increasing pressure as Prime Minister Shinzo Abe's more than three-year-old policy blitz, dubbed Abenomics, shows little sign of generating consistent growth. "Investors are wary that the BoJ will disappoint and it'll lead to a bout of selling," Mitsushige Akino, a Tokyo-based executive officer at Ichiyoshi Asset Management, told Bloomberg News.
"The bar has already been raised too high for the BoJ's policies. Unless there's some sort of policy that crosses that line... Japanese stocks will be sold and the yen will be bought." The benchmark Nikkei 225 index fell 1.13 percent, or 187.98 points, to close at 16,476.84, having surged on Wednesday after the government announced its stimulus. The broader Topix index of all first-section shares dropped 1.11 percent, or 14.67 points, to 1,307.00.
The dollar eased to 104.63 yen from 105.31 yen Wednesday in New York, after the Federal Reserve indicated it would take a slow, measured approach to any interest rate hikes. In Tokyo share trading, Mitsubishi UFJ Financial Group was off 2.55 percent at 484.6 yen while rival Sumitomo Mitsui Financial Group fell 2.26 percent to end at 3,070 yen, after saying Wednesday net profit tumbled 31 percent in April-June.
Nintendo slumped 5.49 percent to 21,080 yen a day after the videogame giant logged a huge first quarter net loss, citing the impact of a strong yen. The loss came despite the Pokemon Go mania sweeping the globe since the smartphone game's launch this month. Nissan dropped 2.15 percent to 1,024 yen after reporting Wednesday a decline in net profit, blaming the yen and struggles in its home market. Fujifilm plummeted nearly 10 percent to 3,650 yen on disappointing first-quarter earnings and Japan Airlines lost 4.28 percent to finish at 3,177 yen, after a report warned the carrier's profits would fall.