Tokyo: Stocks fall as rising Covid cases spark recession fears

JAPANESE shares fell on Tuesday (Jul 12), as rising domestic cases of Covid-19 raised worries of a recession and sparked a morning sell-off.

The Nikkei share average closed down 1.77 per cent at 26,336.66, after losing as much as 1.99 per cent earlier in the session.

The broader Topix index lost 1.64 per cent.

Stocks had risen on Monday, outperforming the rest of the region, as the Japanese government’s ruling coalition secured a strong result in the weekend’s upper house election.

The Nikkei was down 2.68 per cent from Monday’s high of 27,062.17 and 0.68 per cent lower than Friday’s close, when markets were rocked by the shooting of former Prime Minister Shinzo Abe.

A domestic securities broker said the market was overbought in the previous session despite the absence of any positive external factors.

“The increased spread of Covid-19 has strengthened fears of a global recession,” said a market participant at a domestic securities firm.

“Given this situation, Japanese stocks, which are largely economically sensitive, are inevitably going to weaken.”

Japan reported 54,993 cases on Monday, according to official government data, up from 16,791 a week earlier.

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Of the Nikkei’s 225 components, 206 fell, 3 were flat, and only 16 gained.

Tech and manufacturing stocks weighed on the index, with electronics components manufacturer TDK falling the most, down 5.14 per cent.

Industrial robotics manufacturers Fanuc and Yaskawa Electric also saw significant losses, as did SoftBank Group and Casio Computer.

Every Nikkei sector lost value, with utilities seeing the smallest losses at 0.07 per cent. Kansai Electric Power gained 1.09 per cent, the second most of any component on the index.

Food products company Nippon Suisan Kaisha was the best performer, gaining 2.74 per cent.

Video games companies Konami Group and Nintendo also saw gains, up 0.67 per cent and 0.42 per cent, respectively. REUTERS