Nikkei slumps for fourth straight session on Fed tightening concerns

JAPAN’S Nikkei share average fell on Friday (Jul 7) for a fourth consecutive day, tracking overnight declines in US stocks after strong labour market data fuelled speculation the Federal Reserve will become more aggressive in fighting inflation.

The Nikkei ended the day down 1.17 per cent at 32,388.42, after accelerating declines in the final half hour of trade.

Every Nikkei sector fell, led by an almost 2 per cent slide for real estate. Energy was the smallest laggard, down 0.77 per cent.

Of the index’s 225 components, 180 fell, 42 rose and three were flat.

The broader Topix sagged 0.97 per cent to 2,254.90.

The Nikkei has fallen 2.41 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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Drugmaker Eisai was the biggest percentage decliner, dropping 4.67 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.

Other notable losers included appliance makers Sharp and Panasonic, which dropped 3.1 per cent and 2.8 per cent, respectively.

At the other end, regional lenders China Bank and Fukuoka Financial Group rose 2.1 per cent and 1.3 per cent each.

Financials as a sector, though, ended down by 0.87 per cent, after outperforming in the morning session and entering the midday recess flat. REUTERS