Asia : Nikkei falls on weak Wall Street, but firms in share buybacks shine

TOKYO : Japanese stocks fell on Friday morning in line with a dip on Wall Street and as investors stayed cautious before a speech by Federal Reserve Chair Janet Yellen, but companies announcing share buybacks attracted buying.The Nikkei share average dropped 0.8 percent to 16,419.18 in midmorning trade. For the week, the benchmark index has fallen 0.9 percent.

Traders expect overall trading to be subdued on Friday amid caution before Yellen delivers the keynote speech at the annual gathering of central bankers in Jackson Hole, Wyoming.

“Yellen’s views on U.S. rate hike are expected to move markets in the short term, but in the longer term, the market is also focused on U.S. jobs data next week and other economic indicators,” said Hikaru Sato, a senior technical analyst at Daiwa Securities.

Sato said that investors may not take large positions before the weekend.

Regional Fed presidents have stepped up their hawkish rhetoric in recent weeks, and Kansas City Fed President Esther George said on Thursday it was time for the Fed to raise U.S. rates gradually, given progress on employment and inflation.

Meanwhile, the Bank Of Japan bought exchange-traded funds worth 70.7 billion yen on Thursday, as part of its asset-buying programme. Traders said that since the market fell in the morning session, there were expectations the central bank may buy ETFs on Friday as well.

Exporters lost ground, with Toyota Motor Corp falling 2.5 percent, Honda Motor Co dropping 1.9 percent and Advantest Corp declining 2.1 percent.

Companies announcing share buyback plans, however, outperformed. Consumer product maker Kao Corp soared 3.1 percent after saying that it plans to buy back up to 10 million shares for up to 50 billion yen.

Gaming company Capcom Co jumped 7.6 percent after it said it would repurchase up to 1.5 million shares of its own shares for up to 3.3 billion yen.

The broader Topix dropped 0.7 percent to 1,295.10 and the JPX-Nikkei Index 400 declined 0.7 percent to 11,638.97.