Roundup: Japan’s Nikkei stock index hits 4-month low
TOKYO, June 13– Japan’s Nikkei stock index dropped to a more than four-month closing low on Monday as soaring inflation in the United States raised the prospects of further aggressive interest rate hikes by the U.S. Federal Reserve and sent the yen tumbling to its lowest level in over 23 years. Local brokers here said that data showing a steeper-than-expected…
TOKYO, June 13 (Xinhua) — Japan’s Nikkei stock index dropped to a more than four-month closing low on Monday as soaring inflation in the United States raised the prospects of further aggressive interest rate hikes by the U.S. Federal Reserve and sent the yen tumbling to its lowest level in over 23 years.
The 225-issue Nikkei Stock Average plunged 836.85 points, or 3.01 percent, from Friday to close the day at 26,987.44.
The broader Topix index, meanwhile, dropped 42.03 points, or 2.16 percent, to finish at 1,901.06.
Local brokers here said that data showing a steeper-than-expected rise in U.S. consumer prices in May released late last week saw U.S. stocks tumble on inflation concerns and fears of further aggressive rate hikes by the Fed.
“Investors were concerned that ongoing inflation is more persistent than they had expected and global central banks would have to take tighter measures to contain it,” Ikuo Mitsui, fund manager at Aizawa Securities, was quoted as saying.
Due to concerns over a widening interest rate gap between the Bank of Japan, the Fed, the Bank of England and the European Central Bank, all of whom have increased their key interest rates of late to combat inflation, with the exception of Japan, the yen briefly plunged early Monday to a 23-year low against the U.S. dollar.
“Monetary policies in the United States and Japan currently face opposite directions, with the yen’s fall unlikely to stop unless they start to see the same way,” Yuji Saito, head of the foreign exchange department at Credit Agricole Corporate & Investment Bank in Tokyo, was quoted as saying.
While other major central banks have opted to tackle inflation by raising their key interest rates, the Bank of Japan reiterated its commitment to maintaining its super-loose monetary easing policy on Monday.
Following the yen’s tumble on Monday, the Bank of Japan’s Governor Haruhiko Kurodo said sharp declines of the Japanese currency are both negative and undesirable for the economy.
“Recent sharp yen falls are raising uncertainty over the outlook and making it difficult for companies to compile business plans, so they are negative and undesirable for the economy,” Kuroda said.
“It’s important that companies that have seen their earnings improve due to the yen’s depreciation will raise capital spending and wages, and a positive cycle for more income and spending will emerge for the economy,” said the BOJ chief.
But Japan’s Finance Minister Shunichi Suzuki on Monday pointed out that against a backdrop of the BOJ’s belief that the current global inflationary pressure is only temporary, the yen’s weakness would not pose such a problem if wages were increasing commensurate with rising import costs which affect consumption. However, wages in Japan have long been stagnant.
“Even if the yen depreciates and import costs rise, it would not be an issue as long as wages grow to offset the impact. But now, wage growth is weak so I see more of the negative side of yen weakness emerging,” said Suzuki.
By the close of play, machinery, electric appliance and transportation equipment issues comprised those that declined the most, with issues that fell outpacing rising ones by 1,457 to 332, while 49 ended the day unchanged.
Japanese technology shares were among notable decliners following their U.S. peers tanking late last week, with heavily-weighted tech investor SoftBank Group falling 6.8 percent, while chip-making equipment maker Tokyo Electron fell 5.3 percent.
Screen Holdings lost 5.2 percent, while Advantest ended the day 5.0 percent lower.
Issues that bucked the downward trend included those who stand to gain from Japan easing its COVID-19-related border controls for foreign visitors.
Such issues included department store chain Takashimaya, which added 0.7 percent, while ANA Holdings rose 0.4 percent.
On the Prime Market on Monday, 1,218.59 million shares changed hands, dropping from Friday’s volume of 1,272.53 million shares.
The turnover on the first trading day of the week came to 2,895.47 billion yen (21.54 billion U.S. dollars). Enditem