Japan’s Nikkei tracks Wall Street lower on US Fed rate hike bets

JAPAN’S Nikkei share average fell on Friday (Jul 7), tracking declines in US stocks overnight after strong labour market data added to bets of additional US Federal Reserve interest rate hikes.

The Nikkei lost 0.47 per cent to 32,618.88 by the midday break. The index had fallen as much as 1.36 per cent early in the session.

Every Nikkei sector but one entered the recess lower, led by a more than 1 per cent slide for real estate. Financials pared early losses to end the morning flat.

Of the index’s 225 components, 149 fell, 74 rose and two were flat.

The broader Topix sagged 0.39 per cent to 2,268.10.

The Nikkei has fallen 1.72 per cent this week, after closing at a 33-year high on Monday. Since mid-March, it has rallied nearly 27 per cent.

“After the rally of the past three months, I think many investors are selling to take profits,” said Kenji Abe, a strategist at Daiwa Securities.

“The market seems to have some concerns about the US economy, but I’m optimistic for a soft landing,” he added.

Abe predicted the Nikkei could fall to 31,500 this summer, but then resume its climb to reach 35,000 by year-end.

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On Friday, drugmaker Eisai was the biggest percentage decliner, dropping 6.39 per cent, despite news that its Leqembi Alzheimer’s treatment won a coveted standard approval nod from the US Food and Drug Administration.

While the approval was widely expected, what was unexpected was an updated label containing more stringent warnings about the risk of bleeding in the brain for some patients, Jefferies analysts wrote in a report.

“We expect sales growth to be slow and therefore rate Eisai a Hold,” they said.

Peer Sumitomo Pharma was the next biggest decliner, down 2.49 per cent.

Other notable losers included appliance makers Sharp and Panasonic, which dropped 2.23 per cent and 2.15 per cent, respectively. REUTERS