Nikkei index down over 2 pct on worries over US monetary tightening

Kyodo News

Posted at May 09 2022 05:09 PM

TOKYO - Tokyo stocks ended sharply lower Monday, with the benchmark Nikkei dropping over 2 percent, amid worries over further monetary policy tightening in the United States.

The 225-issue Nikkei Stock Average ended down 684.22 points, or 2.53 percent, from Friday at 26,319.34. The broader Topix index finished 37.52 points, or 1.96 percent, lower at 1,878.39.

On the top-tier Prime Market, decliners were led by iron and steel, air transportation, and nonferrous metal issues.

The U.S. dollar rose to the lower 131 yen range, up from the mid-130 yen range, after strong U.S. jobs data for April released late last week raised the prospect that the Federal Reserve will accelerate its pace of monetary tightening, dealers said.

The dollar has been bought on expectations of a widening policy gap between the Fed and the Bank of Japan, which has maintained its ultraloose monetary policy.

The Nikkei index saw its largest one-day drop in about two months, tracking a fall on Wall Street late last week, on concerns that the Fed may turn more aggressive in its battle against inflation.

The Fed raised its key interest rates by half a percentage point on Wednesday, its biggest hike in over 20 years. The central bank decided in March to raise key interest rates for the first time since 2018.

The Japanese stock market was also pressured by fears over China's economy as its government continues its stringent "zero-COVID" strategy, keeping some parts of the country under lockdown, brokers said.

Fast Retailing, the operator of the Uniqlo clothing chain, dragged on the benchmark Nikkei, as it tanked 3,840 yen, or 6.3 percent, to 57,480 yen, on concerns that sales in China may fall due to the country's coronavirus restrictions, brokers said.

"Investors see that the economies of the United States and China, which are the top two in the world, could slow down, triggering fears over the impact on corporate revenue," said Norihiro Fujito, senior investment strategist at Mitsubishi UFJ Morgan Stanley Securities Co.

"Considering that, it makes sense that the Nikkei fell this much today," he added.

Market participants are focused on what Russian President Vladimir Putin will say in a speech later Monday on Victory Day in Russia, an anniversary commemorating the Soviet Union's role in defeating Nazi Germany in World War II.

Meanwhile, Fujito said the Japanese stock market showed limited reaction after Prime Minister Fumio Kishida said Monday the country will slowly phase out oil imports from Russia.

Among Prime Market issues, declining issues outnumbered advancers 1,598 to 211, while 28 ended unchanged.

JFE Holdings slid 113 yen, or 7.1 percent, to 1,481 yen, when investors were spooked by the iron manufacturer's decision to not release an earnings forecast for the current fiscal year through March during its earnings briefing on Friday, brokers said.

Nippon Yusen fell 90 yen, or 0.9 percent, to 9,720 yen, after the marine transportation service provider's earnings forecast for fiscal 2022 net profit came in below market expectations.

Trading volume on the Prime Market fell to 1,263.42 million shares from Friday's 1,498.56 million.



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