Tokyo stocks retreated Wednesday, the last trading day of fiscal 2020, weighed down by an overnight drop on Wall Street and continued concerns over significant losses caused by a U.S. hedge fund.
The 225-issue Nikkei average shed 253.90 points, or 0.86%, to close at 29,178.80, sinking for the first time in five sessions. On Tuesday, the index climbed 48.18 points.
The Topix index of all first section issues ended 23.86 points, or 1.21%, lower at 1,954.00, after losing 15.48 points the previous day.
The Tokyo market opened lower following falls in all three key U.S. market indicators caused by a rise in U.S. long-term interest rates.
The market pared losses somewhat in the morning, helped by a rise of U.S. stock index futures in off-hours trading, but soon turned down again as banking names continued to slide due to investor fears after U.S. fund Archegos Capital defaulted on margin calls.
A wait-and-see mood took hold in the afternoon, ahead of U.S. President Joe Biden’s announcement of an infrastructure spending package later on Wednesday.
“While the rise in U.S. interest rates led to selling for technology issues such as semiconductor names, it also lifted the dollar and boosted buying for export names,” Masahiro Ichikawa, chief market strategist at Sumitomo Mitsui DS Asset Management Co., said.
“Investors are paying especially close attention to whether Biden’s infrastructure package will be as large as speculated and whether it can be passed (by Congress) as quickly as the coronavirus relief package was,” Kazuo Kamitani, strategist at Nomura Securities Co., said.
Brokers added that better-than-expected Chinese manufacturing industry purchasing managers’ index for March, released during trading hours, did little to sway trading as there was already a market consensus on the strength of China’s post-coronavirus crisis economy.
In the TSE first section, losers outnumbered gainers 1,650 to 491, while 45 issues were unchanged. Volume edged down to 1.325 billion shares from Tuesday’s 1.340 billion shares.
Mitsubishi UFJ Financial Group plunged 3.87% after it said the previous day that a European subsidiary of Mitsubishi UFJ Securities Holdings Co. may lose some $300 million from financial transactions related to a U.S. client, joining Nomura Holdings and Swiss banking giant Credit Suisse in the ranks of financial institutions believed to be affected by the hedge fund defaults.
Some technology stocks such as silicon wafer producer Shin-Etsu Chemical met with selling following the rise of U.S. interest rates.
On the other hand, automakers Toyota and Subaru gained 3.04% and 1.10%, respectively, as the dollar advanced against the yen.
Other major winners included internet advertising firm Cyberagent.
In index futures trading on the Osaka Exchange, the key June contract on the Nikkei average lost 270 points to end at 29,210.
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