Japan Nikkei falls ahead of US midterm election results

Japanese share market finished session slightly below unchanged line on Wednesday, 09 November 2022, as investors opted to secure some of the gains of the previous two sessions amid caution ahead of the U.S. inflation data as well as the results of the U.S. midterm elections that could signify a power shift in Washington.

Meanwhile, risk sentiments dented further after disappointing quarterly results from some major companies as well as official data showing the world's second-largest economy factory gate prices fell for the first time in nearly two years.

At closing bell, the 225-issue Nikkei Stock Average index declined 155.68 points, or 0.56%, to 27,716.43. The broader Topix index of all First Section issues on the Tokyo Stock Exchange was down 8.07 points, or 0.41%, to 1,949.49.

Total 18 of 33 TSE sectors declined, with Other Products (down 4.5%), Mining (down 2.6%), Oil & Coal Products (down 2.3%), Air Transportation (down 2.1%), Pharmaceutical (down 1.5%), and Land Transportation (down 1.5%) issues being notable losers, while Marine Transportation (up 2.2%), Pulp & Paper (up 1.4%), Metal Products (up 1.2%), and Chemicals (up 0.7%) issues were notable gainers.

Investors awaited the results of the U.S. midterm elections, which could affect future levels of government spending and regulation in the second half of President Joe Biden's term.

Results of the U.S. midterm elections will decide whether the Democrats lose or retain congressional control halfway through President Joe Biden's term, with investors expecting Republican gains. Republicans are widely favoured to pick up the five seats they need to control the House, but control of the Senate could come down to tight races in several states. A split Congress would diminish the outlook for fiscal support measures, leading to investors to expect the Fed to sooner become less aggressive in raising interest rates

Traders also continued to look ahead to Thursday's report on consumer price inflation. The inflation data would give clues about how much the U.S. Federal Reserve's rapid interest rate hikes are helping cool down the economy.

ECONOMIC NEWS: Overall bank lending in Japan was up 2.7 percent on year in October, the Bank of Japan said on Wednesday, coming in at 593.084 trillion yen. That follows the 2.3 percent increase in September. Excluding trusts, lending rose an annual 3.0 percent to 516.328 trillion yen, while lending from trusts rose 0.6 percent to 76.755 trillion yen.

CURRENCY NEWS: Japanese yen was trading around upper 145 level against greenback on Wednesday. The yen fetched at 145.794 per dollar at 07:29 GMT, as against previous day close of 145.663 per dollar.

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