Japan Nikkei falls on Omicron fears, ahead of Fed meeting

Japan share market finished session lower on Tuesday, 14 December 2021, amid renewed worries about the Omicron coronavirus variant after first confirmed Omicron-linked death in Britain. Meanwhile, market sentiments were also weak on caution ahead of the Federal Reserve's money policy announcement on Wednesday as well as a Bank of Japan policy meeting later this week.

At closing bell, the 225-issue Nikkei Stock Average declined 207.85 points, or 0.73%, to 28,432.64. The broader Topix index of all First Section issues on the Tokyo Stock Exchange fell 4.32 points, or 0.22%, to 1,973.81.

Total 20 of 33 Topix industry groups ended down, with bottom performing sectors were Air Transportation (down 2.7%), Services (down 1.2%), Land Transportation (down 1.2%), Mining (down 0.9%), and Securities & Commodities Futures (down 0.9%), while top performing issues included Insurance (up 1.6%), Pharmaceutical (up 1%), Electric Power & Gas (up 0.9%), Transportation Equipment (up 0.7%), and Banks (up 0.5%).

Investors are keeping a close eye on the Fed Chairman Jerome Powell policy meeting announcement for indication about quickening of its monthly bond purchase tapering program, as it seeks to combat an ongoing rise in inflation. The Fed is on Wednesday expected to signal a faster wind-down of its $120 billion a month bond buying programme in a move to fight high inflation, which could move it one step closer to raising interest rates.

Fears over the Omicron variant of COVID-19 were heightened after British Prime Minister Boris Johnson warned of a tidal wave of new cases, and the World Health Organization said it poses a very high global risk, with some evidence that it evades vaccine protection.

Shares of Air and land transportation issues were lower on renewed concerns that the Omicron variant may cause a resurgence of COVID-19 cases and hinder the movement of people. ANA Holdings declined 2.6% and while Japan Airlines sank 2.8%. Central Japan Railway dropped 1.4% and Odakyu Electric Railway declined 1.1%.

Chip-related shares were also down after their U.S. counterparts fell overnight, with Tokyo Electron down 1.8% and Advantest down 1.4%.

Steelmakers were higher after reports that Washington has made an offer to Tokyo aimed at resolving disputes over tariffs imposed on Japanese steel and aluminium under former president Donald Trump in 2018. Also, separate reports stated Nippon Steel is looking to buy electric furnaces in Thailand as a way to cut CO2 emissions.

ECONOMIC NEWS: Japan Industrial Production Climbs 1.8% On Month In October - Japan's industrial production rose a seasonally adjusted 1.8% monthly in October, data from the Ministry of Economy, Trade and Industry said on Tuesday. In the initial estimate, output grew 1.1%. Shipments increased 2.4% monthly in October. According to the initial estimate, shipments rose 2.0%. Inventories rose 0.6% versus a 0.8% increase in the initial estimate. The inventory ratio declined 0.6% in October. In the initial estimate, the inventory ratio was stable. On a yearly basis, industrial production declined 4.1% in October. According to the initial estimate, output fell 4.7%.

CURRENCY NEWS: The Japanese yen traded at 113.61 per dollar, weakening from around 113.2 in earlier sessions.

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