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Japan’s Nikkei falls for 3rd day amid U.S. inflation, China COVID worries

Men wearing masks walk past an electronic stock board showing Japan's Nikkei 225 index, June 14, 2022, in Tokyo.
Men wearing masks walk past an electronic stock board showing Japan's Nikkei 225 index, June 14, 2022, in Tokyo.
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14 Jun 2022 04:06:02 GMT9
14 Jun 2022 04:06:02 GMT9

Japan’s Nikkei index fell for a third day on Tuesday, amid risks to growth from aggressive U.S. monetary tightening and strict COVID-19 curbs in China, but ended off its lows as bargain hunting emerged and U.S. stock futures pointed to a rebound.

The Nikkei closed 1.32% lower at 26,629.86, but after earlier sinking as much as 2.19%, the lowest since May 19.

The broader Topix slid 1.19% to 1,878.45.

“There’s a stock feeling underpinning the market that stocks have gotten cheap, and we’re seeing some bargain hunting,” said a market participant at a domestic trust bank.
Still, sentiment remains fragile.

Beijing is testing millions to stem the spread from a cluster infection at a 24-hour bar, with China’s vice premier saying COVID prevention and control needs to be strengthened. Shanghai is only just emerging from a crippling two-month-long lockdown.

“The reimposition of restrictions in Beijing, Shanghai and other places is sparking worries of new supply chain disruptions,” said Kazuo Kamitani, a strategist at Nomura Securities.

Meanwhile, investors are seen bracing for 150 basis points of rate hikes over two meetings by the Federal Open Market Committee — one that ends on Wednesday and another in the following month. This is after data on Friday showed U.S. consumer price inflation ran red hot.

“Right before the FOMC is a very difficult backdrop for growth stocks,” said a market participant at a domestic securities company.

Wall Street confirmed a bear market overnight, with the S&P 500 dropping 3.88% on the day and down more than 20% from its most recent closing high. The tech-heavy Nasdaq tumbled 4.6%.

Tech was among the Nikkei’s worst performing sectors, down 1.95%. Healthcare dropped 2.18%, while real estate slumped the most, down 2.97%.

Even financials gave up early gains on higher bond yields to end 0.14% lower.

Of the Nikkei’s 225 components, 171 fell versus 52 that rose and two that were flat.

Chip-making equipment maker Tokyo Electron sank 2.84%, and was the Nikkei’s biggest drag, shaving off 36 index points.

Startup investor SoftBank Group knocked another 28 points off the benchmark, with a 2.56% decline.

Travel-related stocks took a hit, with airlines ANA Holdings off 3.61% and Japan Airlines down 2.88%.

Reuters

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