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Japan’s Nikkei snaps 7-day winning streak as Fed meeting looms

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Japan’s Nikkei snapped a seven-day winning streak on Monday, tracking Wall Street’s weakness in the previous session as investors awaited this week’s U.S. GDP data and Federal Reserve meeting.

At close, the Nikkei share average was down 0.77% at 27,699.25, retreating from a six-week high marked on Friday. The broader Topix slipped 0.65% to 1,943.21.

Investors’ focus is now on the Fed meeting and second-quarter U.S. gross domestic product data this week. While the U.S. central bank is expected to raise interest rates by 75 basis points, the GDP data is likely to be negative again.

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“Investors want to gauge the direction of stock markets after seeing the outcome of the FOMC (U.S. Federal Open Market Committee) and the GDP (data),” said Ikuo Mitsui, a fund manager at Aizawa Securities.

“Looking at the PMI data that was out last week, the economy is obviously slowing down.”

Business activity in the United States, the world’s largest economy, contracted for the first time in nearly two years this month, activity in the euro zone retreated for the first time in over a year, and growth in Britain was at a 17-month low, purchasing managers’ surveys showed last week.

In Japan, electrical component maker Yaskawa Electric Corp dragged the Nikkei the most, falling 4.06%, followed by pharmaceuticals company Eisai Co Ltd, which lost 3.74%. Camera maker Nikon Corp fell 3.08%.

Defensive shares were strong with the railway sector rising 1.72% to be the top gainer among the Tokyo Stock Exchange’s 33 industry sub-indexes.

Companies in the railway business including Tokyu Corp , Tobu Railway Co Ltd, and Keisei Electric Railway Co Ltd all saw gains and were among the top Nikkei performers.

The utilities sector was the strongest sector overall, rising 0.61%. (Reporting by Junko Fujita and Tokyo markets team; Editing by Subhranshu Sahu)

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