Japan Nikkei falls ahead of U.S. CPI data

Japanese share market finished session lower on Thursday, 10 November 2022, on tracking an overnight decline on Wall Street following inconclusive U.S. midterm election result with an unexpectedly tight race between Democrats and Republicans and on caution before U.S. inflation data due out later in the day.

Most of TSE sectors traded lower, with decline were led by oil and coal product, iron and steel, and transportation equipment issues.

At closing bell, the 225-issue Nikkei Stock Average index declined 270.33 points, or 0.98%, to 27,446.10. The broader Topix index of all First Section issues on the Tokyo Stock Exchange was down 12.83 points, or 0.66%, to 1,936.66.

Total 23 of 33 TSE sectors declined, with Rubber Products (down 4%), Oil & Coal Products (down 2.2%), Transportation Equipment (down 1.7%), Mining (down 1.7%), Iron & Steel (down 1.7%), and Chemicals (down 1.3%) issues being notable losers, while Pulp & Paper (up 1.4%), Foods (up 0.7%), Banks (up 0.5%), and Construction (up 0.5%) issues were notable gainers.

Overnight on Wall Street, shares ended lower as uncertainty around the outcome of a tightly contested election as the GOP's midterm 'red wave' failed to materialize. Control of both houses of Congress remains up for grabs following yesterday's elections, although Republicans are projected to earn a narrow majority in the House. The performance by Republicans was not as strong as many had expected, with many candidates backed by former President Donald Trump underperforming. It remains unclear which party will have a majority in the Senate, as key races in Georgia, Nevada and Arizona currently remain undecided. A divided government is often seen as positive for US stock markets, as gridlock between Congress and the White House reduces the likelihood of passing disruptive new regulations or tax increases.

Traders continued to look ahead to report on US consumer price inflation data due later in global day which would give clues about how much the U.S. Federal Reserve's rapid interest rate hikes are helping cool down the economy.

ECONOMIC NEWS: Foreign investors were net buyers of Japanese stocks for a second straight week in the week to Nov. 4, as strong earnings outlook of some domestic companies boosted investor sentiment. Foreigners purchased Japanese stocks worth a net 247.9 billion yen, which compared with 178.89 billion yen worth of net buying in the previous week, data from exchanges showed. Foreigners drew a net 390.44 billion yen worth of cash equities but withdrew 142.54 billion out of derivatives, after two weeks of buying in a row.

CURRENCY NEWS: Japanese yen was trading around mid-146 level against greenback on Thursday, with investors focusing on U.S. inflation data due out later in the day. The yen fetched at 146.35 per dollar at 07:30 GMT, as against previous day close of 146.41 per dollar.

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