Asia Markets Decline; Japanese Stocks Fall on Weak Confidence Gauge

A closely watched index shows the Japanese business outlook is at its weakest in more than three years.
By Laura Board ,

Asian benchmark indices were headed to end the week mainly in the red, with Japanese equities markets posting steep weekly losses as the yen hovers near its highest point against the dollar in  well over two years.

At the close of trading the Nikkei 225 was down 1.11% at 15,106.98. That's about 3.7% lower than its close last Friday.

The Topix was down 1.32% at 1,209.88.

The dollar was recently down 0.29% against the yen at ¥100.480, nearing levels last seen in November 2013. The yen gained ahead of upper house elections in Japan on Sunday in which the ruling coalition led by Prime Minister Shinzo Abe needs to win a two-thirds majority.

The so-called Economy Watchers survey of business confidence in Japan, the first to reflect the mood after the U.K.'s Brexit vote, dropped more than expected, with the outlook index dropping the most since March 2013.

"A benign interpretation would be that the outlook has merely caught up with reality," wrote Capital Economics analysts.  "But we suspect that the strengthening of the yen as well as uncertainty about the impact of Brexit on foreign demand played a major role."

The yield on the 10-year Japanese government bond was recently down 1 basis point at minus 0.29%.

Leading banks Mitsubishi UFJ Financial and Sumitomo Mitsui Finance both fell, though exporters fared the worst, with Asahi Glass leading the decliners to close down 8.2%. The Nikkei predicted that Asahi had managed to hold operating profit steady in the first half, defying expectations for a 12% decline, though it said sales had probably slipped 4%. The company will release its results on Aug. 1.

S&P 500 mini futures were down 0.08% before today's critical non-farm payrolls report for June.  FTSE 100 futures were down 0.29%.

The Hang Seng was recently down 1.02% at 20,495.33.

On mainland China the CSI 300 composite slipped 0.24% to 3,202.40. At that level the index is up 1.5% on last Friday's close.

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