Japanese stocks fell on Monday as Chinese markets slid on soft economic data and telecommunication shares were sold off after Prime Minister Abe called on cellphone companies to reduce rates. The Nikkei share average lost 1.6 percent to close at 17,965.70 after a day of cautious trading. Trading volume was well below the 5 day average and the Nikkei volatility index remained high at 33.2.
Softbank Group Corp shares fell 5.5 percent while competitor KDDI Corp fell 8.6 percent and NTT Docomo tumbled 9.8 percent. Market players said investors remained cautious ahead of Bank of Japan and US Federal Reserve policy meetings this week. "Until we have some visibility on the rate environment expect the malaise in equity markets to continue," said Martin King, co-managing director at Tyton Capital Advisors in Tokyo.
The broader Topix shed 1.2 percent to close at 1,462.41. All but two of its 33 subindexes closed in the negative. The JPX-Nikkei Index 400 lost 1.3 percent to 13,114.33. Investors were also wary ahead of key events this week, including the Bank of Japan and US Federal Reserve policy setting meetings. Telecommunications firms tumbled after Prime Minister Shinzo Abe late last week demanded that cellphone rates be lowered.
Oil stocks underperformed as crude prices fell after Goldman Sachs cited oversupply and concerns over China's economy. Inpex Corp tumbled 5.8 percent and Japan Petroleum Exploration fell 1.8 percent. The Nikkei fell 0.1 percent to 18,241.62 in midmorning trade. In a two-day monetary policy meeting on Monday and Tuesday, the Bank of Japan policymakers are expected to keep its policy unchanged, sources familiar with their thinking say.
Investors are also awaiting the outcome of the Fed's monetary policy meeting on Wednesday and Thursday on whether it will raise benchmark US rates for the first time in almost a decade. "Investors will refrain from taking large positions this week until these events are over," said Chihiro Ohta, general manager at investment research and investor services at SMBC Nikko Securities, adding the market is looking to BOJ Governor Haruhiko Kuroda's speech for policy clues.
"The majority of investors do not expect a policy change for now, but there is a slight expectation that the bank will ease some time soon and they will be looking for a sign in Kuroda's speech," Ohta said. Kuroda is expected to offer a bleaker view on overseas economies and may lower its assessment on the country's exports, sources familiar with the matter told Reuters. Exporters were mostly lower. Toyota Motor Corp dropped 0.5 percent and Honda Motor Co shed 1.2 percent. Bucking the weakness, Shiseido Co jumped 5.4 percent after Goldman Sachs raised its rating to 'neutral' from 'sell', saying that its stock price had dropped below its target price of 2,400 yen. Goldman also said that inbound-tourism demand will likely continue supporting the company's cosmetics sales and profits.