Tokyo: Equities fall as investors await Bank of Japan review

[TOKYO] Japanese stocks fell for the first time in four days ahead of a Bank of Japan monetary policy review in which it's expected to keep stimulus unchanged.

The Topix index declined 0.2 per cent to 1,377.31 at 9:01 am in Tokyo, with about three shares falling for every two that rose. The gauge posted its first weekly decline in four weeks last week, after jumping 15 per cent over the preceding three weeks.

The Nikkei 225 Stock Average retreated 0.2 per cent to 17,203.51 on Tuesday. The BOJ concludes a two-day meeting Tuesday, to be followed by a policy decision from the Federal Reserve on Wednesday.

"Fundamentally, investors are trying to see where US and Japanese monetary policy will be going," Toshihiko Matsuno, chief strategist at SMBC Friend Securities Co in Tokyo, said by phone.

"Most think that the Bank of Japan won't make a move, but they might. The Japanese economy's worsening, so the possibility that they'll do something isn't zero."

35 of 40 economists surveyed by Bloomberg forecast the BOJ will keep policy unchanged Tuesday, with most expecting the bank's board to wait before approving more monetary stimulus. Governor Haruhiko Kuroda surprised markets with his Jan 29 decision to introduce negative interest rates.

The BOJ's and Fed reviews come as investors start to question the potency of central bank intervention. Japan's surprise shift into negative rates and last week's unprecedented stimulus move from the European Central Bank have received a mixed reception in markets as concern over a potential global slowdown and the impact of falling oil prices unnerves traders. Global equities have staged a cautious comeback since reaching a 2 1/2-year low mid-February, as the prospect of a production freeze steadied oil prices and commodities.

Futures on the Standard & Poor's 500 Index were little changed. The underlying US equity gauge slipped 0.1 per cent on Monday in light trading, near the highest levels this year, as investors await further assurances that central banks will continue to support growth. The Federal Open Market Committee is scheduled to make its rate decision on Wednesday.

Data on Japanese industrial production in January will be released Tuesday afternoon.

The Topix index closed Monday above its 50-day moving average after trading below it since mid-December. The last time the equity measure rose above the 50-day average was in October, when it continued gaining for about a month for a 5.2 per cent advance.

BLOOMBERG