Tokyo Stocks Fall Further on Weak U.S. Equities

May 16, 2018

Tokyo- Stocks lost further ground on the Tokyo Stock Exchange on Wednesday, hurt in part by overnight falls in U.S. shares.

The 225-issue Nikkei average shed 100.79 points, or 0.44 pct, to close at 22,717.23, after losing 47.84 points on Tuesday. It remained in negative territory throughout Wednesday's session.

The TOPIX index of all first-section issues was down 4.80 points, or 0.27 pct, at 1,800.35. It retreated 0.77 point the previous day.

The Tokyo market opened weaker following Wall Street's downturn on Tuesday on the back of a rise in long-term U.S. interest rates stemming from growing inflation concerns, market sources said.

Selling gathered pace also because Japan's preliminary gross domestic product data for January-March, released shortly before the opening bell, turned out weaker than expected, according to the sources.

But the market's downside was underpinned by the dollar's rise above 110 yen and hopes for exchange-traded fund purchases by the Bank of Japan, with the TOPIX popping up into the sunny side briefly in the afternoon session, the sources said.

Wednesday's decline came as "the earnings reporting season (in Japan) has passed its peak, leaving investors with few trading incentives," said Hideyuki Suzuki, head of the investment market research department at SBI Securities Co.

Uncertainty over the June 12 U.S.-North Korea summit overshadowed the market, Yutaka Miura, senior technical analyst at Mizuho Securities Co., pointed out.

On Wednesday, North Korea abruptly called off its ministerial meeting with South Korea, set for the same day, due to its frustration at a U.S.-South Korea air force drill, and threatened to cancel the upcoming meeting between its leader, Kim Jong Un, and U.S. President Donald Trump in Singapore.

Miura said that the Tokyo stock market was dragged down also by "falls in other Asian markets."

Meanwhile, SBI Securities' Suzuki indicated that the market's downside was limited thanks to buying on dips.

Falling issues outnumbered rising ones 1,120 to 890 on the TSE's first section, while 73 issues were unchanged.

Volume shrank to 1,626 million shares from 1,730 million shares on Tuesday.

Mitsubishi UFJ Financial went down 2.36 pct after the megabank group said Tuesday that its consolidated net profit in fiscal 2018 is expected to fall 14.1 pct from the previous year to 850 billion yen.

Semiconductor-related Tokyo Electron, Disco, Screen and Advantest were downbeat after their U.S. peers fared poorly in New York trading on Tuesday.

Mobile phone carrier Softbank Group and clothing retailer Fast Retailing were among other major losers.

By contrast, insurer Dai-ichi Life Holdings rose 1.93 pct after announcing an own share buyback plan on Tuesday.

Automakers Toyota, Nissan, Subaru and Mazda were buoyed by the weaker yen.

In index futures trading on the Osaka Exchange, the key June contract on the Nikkei average fell 80 points to 22,740.