Japan Nikkei falls on recession fears

Japan share market finished session lower on Friday, 16 December 2022, on following the broadly negative cues from offshore markets overnight, amid fears that United States and European central banks interest rate hikes will prompt a recession.

Stocks fell almost across the board, with electric appliance, precision instrument, and information and communication issues leading the decline.

At closing bell, the 225-issue Nikkei Stock Average index declined by 524.58 points, or 1.87%, to 27527.12. The broader Topix index of all First Section issues on the Tokyo Stock Exchange declined by 23.69 points, or 1.2%, to 1,950.21.

Investors rushed to sell shares following a sharp drop in U.S. and European equities, as investors grew increasingly concerned that the Federal Reserve and other central banks are willing to risk a recession to bring inflation under control.

Concerns about the outlook for interest rates continued to weigh on market as central banks in Europe raised interest rates a day after the US Federal Reserve hiked its key rate again. The Fed raised its short-term interest rate by half a percentage point on Wednesday, its seventh increase this year. Central banks in Europe followed along Thursday, with the European Central Bank, Bank of England and Swiss National Bank each raising their main lending rate by a half-point Thursday. The BoE rate is now at a 14-year high at 3.5%, while the ECB rate rose to 2%

ECONOMIC NEWS: Japan manufacturing sector continued to contract in December, and at a faster pace, the latest survey from Jibun Bank revealed on Friday with a manufacturing PMI score of 48.8. That's down from 49.0 in November and it moves further beneath the boom-or-bust line of 50 that separates expansion from contraction. The survey also showed that the services PMI rose to 51.7 from 50.3 and the composite index climbed to 50.0 from 48.9.

CURRENCY NEWS: The Japanese yen stood at 137.30 against US dollar in Asian trade on Friday, appreciated by 0.34% from yesterday's close of 137.76, after trading in the range between 136.96-137.85. the yen depreciation was due to dimmed demand for safe heaven unit amid expectations that U.S. interest rates will remain at a high level.

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