Japan’s Nikkei share average fell on Thursday morning after Wall Street ended lower and a stronger yen soured sentiment, while most investors stayed cautious amid the two-day Bank Of Japan policy meeting that ends Friday.
The Nikkei dropped 1.1 percent to 16,488.74 in midmorning trade.
U.S. shares languished after the Federal Reserve left interest rates unchanged, a decision widely expected from the market. The dollar skidded 0.5 percent to 104.91 yen.
Eyes are on the BOJ’s meeting while many investors expect the central bank to expand monetary stimulus after Prime Minister Shinzo Abe on Wednesday unveiled a surprisingly large $265 billion stimulus package to reflate the economy.
“The best-case scenario for the market is that the BOJ decides to increase government debt purchases without cutting interest rates further into negative territory,” said Hikaru Sato, a senior technical analyst at Daiwa Securities.
“But the BOJ can’t save its face if it does not cut rates into negative territory after it introduced the negative interest rate policy (in January), so we need to brace for such possibility, too.”
With the April-June earnings season reaching its peak, individual companies were under the spotlight.
Advantest Corp jumped 12 percent after the chip test system maker raised its full-year forecast. It now expects an operating profit of 11 billion yen, up from previously forecast 10 billion yen.
Fanuc Corp soared 2.2 percent to more than a three-month high of 18,050 yen after the industrial robot maker hiked its full-year operating profit forecast to 134.1 billion yen from 117.3 billion yen for the year ending March 2017.
On the other hand, Fujifilm Holdings Corp tumbled 10 percent after its April-June net profit fell 54 percent on the year.
Banking shares underperformed, with Mitsubishi UFJ Financial Group falling 2.9 percent and Mizuho Financial Group dropping 1.6 percent.
The broader Topix shed 1.3 percent to 1,304.58, with all of its 33 subsectors in negative territory.
The JPX-Nikkei Index 400 slipped 1.3 percent to 11,738.32.