On Wednesday (June 12), the Japanese stock market fell as heavyweight companies such as Fast Retailing dragged down the index, while cautious sentiment dominated the market ahead of policy decisions by the US and Japanese central banks.
The Nikkei index fell 0.66% to close at 38,876.71 points after two consecutive days of gains. The broader Topix index fell 20.36 points, or 0.73%, to 2,756.44 points. #Japanese market#
On the market, pulp and paper, securities companies and marine transportation stocks led the decline.
In terms of individual stocks, the owner of the Uniqlo brand, Fast Retailing, fell 2.45%, the largest drag on the Nikkei index. Recruitment company Recruit Holdings fell 2.95%. Tokyo Electron, a chip manufacturing equipment manufacturer, fell 0.17%.
Meanwhile, Apple's suppliers saw their stock prices rise. TDK rose 4.35%, becoming the stock that supported the Nikkei index the most, while Murata and Taiyo Yuden rose 2.63% and 1.71%, respectively.
Of the 225 constituents of the Nikkei index, 51 rose, 170 fell and 4 remained unchanged.
The Nikkei volatility index, which measures the implied volatility of Nikkei 225 options, fell 2.22% to 17.58.
"Last night only a few large technology stocks drove up the two main US indices. Therefore, market participants did not actively buy various Japanese stocks today," said Shuutarou Yasuda, market analyst at Tokai Tokyo Intelligence Laboratory.
The S&P 500 index and the Nasdaq index both hit historic closing highs for the second consecutive trading day, with Apple's stock price rising more than 7%. However, the Dow Jones Industrial Average fell 0.31%.
The stock market as a whole is in a negative territory, as market participants remain cautious ahead of key economic events and are reluctant to chase gains too aggressively.
Market participants are waiting for key US inflation data for May and updated Fed rate forecasts later in the day for further guidance.
The Bank of Japan is expected to keep interest rates unchanged and consider whether to provide more explicit guidance on how to reduce its massive balance sheet at the end of its two-day policy meeting on Friday.
"Investors are particularly focused on the dot plot (of the Fed) to get clues about whether there will be one, two or three rate cuts this year," said Yutaka Miura, senior technical analyst at Mizuho Securities. The dot plot is an anonymous chart released quarterly that shows individual Fed officials' interest rate forecasts.
Miura noted that people are also watching whether the Bank of Japan will decide at its two-day monetary policy meeting starting Thursday to reduce its bond purchases, taking a step toward normalizing its monetary policy.
Analysts said the Nikkei index's gain of more than 3,900 points in the past two trading days has increased the pressure to take profits.