Tokyo: Nikkei snaps 4-day rally as inflation jitters return
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JAPAN’S Nikkei share average snapped a 4-session rally on Thursday (May 19) after Wall Street plunged overnight on fears that surging inflation would eat into corporate profits and usher in an economic slowdown.
Dragged down by losses in market heavyweight Fast Retailing, the Nikkei closed 1.89 per cent lower at 26,402.84 and posted its biggest drop since May 9. The broader Topix slipped 1.31 per cent to 1,860.08.
“With US shares losing momentum, it was hard for Japanese shares to rise,” said Seiichi Suzuki, chief equity market analyst at Tokai Tokyo Research Institute.
“But the Nikkei is relatively firm as it has not touched a bottom hit in March. That is because in part the weaker yen makes Japanese shares look cheaper and lifted corporate profits.”
US stock indexes plunged on Wednesday after Target’s earnings showed the toll of rising price pressures, sending the retailer’s shares down by a quarter and deepening worries about the impact of inflation on the US economy.
It was the worst one-day loss for the S&P 500 and Dow Jones Industrial Average since June 2020.
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In Tokyo trading, Uniqlo-owner Fast Retailing fell 3.12 per cent and chip-making equipment maker Tokyo Electron lost 3.42 per cent. Technology startup investor SoftBank Group dropped 1.6 per cent.
All but 2 of the 33 industry sub-indexes on the Tokyo Stock Exchange fell, with shipping firms leading the losses.
Auto and parts makers lost 1.81 per cent as Toyota Motor and its affiliate Denso slipped 1.91 per cent and 2.22 per cent, respectively.
Nintendo slipped 0.19 per cent after a filing showed Saudi Arabia-Linked public investment fund owned a 5.01 per cent stake in the game maker.
Staffing agency Recruit Holdings fell 4.14 per cent and was the worst performer among the top 30 core Topix names, followed by retailer Seven & i Holdings, which lost 4 per cent. REUTERS
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