Japanese stocks fell as reports that the U.S. is considering restrictions on fund flows to China hurt market sentiment.
Topix -1% to close at 1,587.80 in Tokyo. Nikkei 225 -0.6% at 21,755.84; +5.1% for the month. Yen +0.1% at 107.80 per dollar.
Automakers and pharmaceuticals were the biggest contributors to the Topix index’s decline. U.S. equities dropped on Friday after Bloomberg reported the Trump administration is considering sweeping limits on capital-market investments into China. In response, a Treasury official on Saturday said the U.S. has no plans “at this time” to stop Chinese companies from listing on American exchanges. China said it would continue to open up its financial markets.
Shares in Tokyo extended declines in the afternoon as passive funds, which track the Nikkei 225 Stock Average, rebalanced portfolios to reflect changes to the blue-chip gauge. Medical information service company M3 Inc. will be added to the Nikkei 225, replacing Tokyo Dome Corp., before the market’s open on Oct. 1.
With Monday’s drop, the 14-day relative strength index for the Topix fell further below the level of 70, which signals when gains may excessive. Still, the Topix was up 5% in September, its biggest monthly gain since October 2017.