Business / Financial Markets | TSE DATA & REPORT

Tokyo stocks suffer sell-off amid growing fears of global recession

JIJI

Stocks plummeted across the board on the Tokyo Stock Exchange on Thursday, as investor sentiment was chilled by signs of a global economic recession ahead.

The 225-issue Nikkei average plunged 249.48, or 1.21 percent, to end at 20,405.65. On Wednesday, the key market gauge advanced 199.69 points.

The Topix index of all first-section issues finished down 15.65 points, or 1.04 percent, at 1,483.85, after rising 12.93 points the previous day.

The market dived immediately after the opening bell, hit by a flurry of sell orders in the wake of one of the worst sell-offs so far this year on Wall Street on Wednesday, in which the Dow Jones Industrial Average tumbled over 800 points. The benchmark Nikkei average expanded its loss by some 400 points in the first 30 minutes.

U.S. equities suffered heavy blows from the 10-year Treasury yield coming below the two-year rate, analysts said, pointing out that the yield curve inversion is regarded as a recession indicator.

Fears of a global recession were fueled by dismal Chinese and German macroeconomic data released the previous day, brokers said. The’s appreciation against the dollar dampened sentiment as well, they added.

But Tokyo stocks showed some resilience on buybacks after the initial sell orders were executed, and repeated minor fluctuations for the rest of the day.

“Investors moved to buy back shares because the inverted yield curve was short-lived,” said Masahiro Ichikawa, senior strategist at Sumitomo Mitsui DS Asset Management Co.

Tomoaki Fujii, head of the investment research division at Akatsuki Securities Inc., offered the view that the inverted yield curve was not foreshadowing a recession in the United States as it was caused by the Chinese and German data. “There was no need to be pessimistic,” he said.

Investors are now waiting for U.S. economic indicators due out later in the day, including the Federal Reserve Bank of Philadelphia’s business outlook report for August, to learn the current state of the U.S. economy, Chihiro Ota, general manager for investment research and investor services at SMBC Nikko Securities Inc., noted.

Falling issues trounced rising ones 1,812 to 272 in the TSE’s first section, while 65 issues were unchanged.

Volume grew to 1.138 billion shares from Wednesday’s 1.063 billion shares.

All of the 33 subsector price indexes dropped.

Technology issues, such as Taiyo Yuden Co. and TDK Corp., went south due to growing concerns about a global recession leading to a demand plunge.

Automakers dropped due to the yen’s rise against the dollar, with Honda Motor Co. falling by 1.42 percent and Nissan Motor Co. by 1.12 percent.

Oil names, including JXTG Holdings Inc. and Inpex Corp., suffered from lower New York crude oil futures.

A handful of winners included Suruga Bank and drugmaker Daiichi Sankyo Co.

In index futures trading on the Osaka Exchange, the key September contract on the Nikkei average shed 200 points to end at 20,380.

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