Japanese market tumbles on rate worries and pandemic outlook

The Japanese stock market ended its session lower on Monday, May 9, 2022, after following a tumble on Wall Street late last week, amid concerns over further monetary policy tightening to combat a high inflation. Meanwhile, fears of an acceleration of the Russian offensive against Ukraine as well as the extension of anti-pandemic containment measures in mainland China also weighed on market sentiments.

At the close, the 225-number Nikkei Stock Average fell 684.22 points, or 2.53%, to 26,319.34. The broader Topix index of all First Section issues on the Tokyo Stock Exchange fell 37.52 points, or 1.96%, to 1,878.39.

Shares of Uniqlo store operator Fast Retailing were among the biggest losers as China tightened COVID-19 lockdowns, worsening sales prospects in the country.

Shares of Japan Steel Works fell 18.8% after it revealed a subsidiary tampered with product data from 1998.

Shares of JFE plunged 9% after refraining from giving guidance for the current fiscal year in earnings after the bell on Friday, citing an uncertain outlook.

In economic news, the Jibun Bank Japan Services Purchasing Managers’ Index (PMI) final rose to a seasonally adjusted 50.7 from the previous month’s final of 49.4. It was also better than a flash reading of 50.5 for April, as consumer sentiment recovered after the government lifted coronavirus curbs following a drop in domestic Omicron infections.

The composite PMI, which is calculated using both manufacturing and services, rose to 51.1 from 50.3 in March.

Meanwhile, the minutes of the Bank of Japan’s March policy meeting on March 17-18 revealed that board members were calling for action to prevent a rise in long-term interest rates. . Several members of the nine-member board said some large companies were raising wages and companies were more willing to pass on higher raw material costs to households, which could put upward pressure on the economy. consumer inflation, according to the minutes. But most of the other board members warned of heightened risks to the Japanese economy from the Ukraine crisis that would keep inflationary pressures subdued, the minutes said. Unlike the United States and the United Kingdom, Japan was not in a situation where the inflation rate would likely exceed the BOJ’s 2% price target in a sustainable way, some members quoted in the report said. minutes. It was therefore important for the BOJ to continue monetary easing to support the economy’s post-pandemic recovery, they said.

CURRENCY NEWS: The Japanese yen was trading at 131.09 to the dollar, weaker from levels below 129 seen against the greenback last week.

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(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

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