Japan Nikkei tumbles 2.9%

Japan share market finished session steep lower on Thursday, 06 January 2022, as investors risk sentiment dampened on following decline in Wall Street overnight after the minutes of the Federal Reserve meeting turned out to be more hawkish than market participants had expected. Meanwhile, the recent increase in coronavirus infections in Japan also weighed on the market.

At closing bell, the 225-issue Nikkei Stock Average stumbled 844.29 points, or 2.88%, to 28,487.87. The broader Topix index of all First Section issues on the Tokyo Stock Exchange retreated 42.26 points, or 2.07%, to 1,997.01.

Fed minutes of the December 14-15 meeting, released on Wednesday stated that "very tight" U.S. labour market might warrant raising rates sooner, and indicated they could also reduce the central bank's overall asset holdings to tame high inflation. Some Fed policymakers also noted that it could be appropriate to start reducing the size of the balance sheet soon after the central bank begins raising interest rates. "They noted that current conditions included a stronger economic outlook, higher inflation, and a larger balance sheet and thus could warrant a potentially faster pace of policy rate normalization," the minutes said. The minutes noted many participants also judged that the appropriate pace of balance sheet runoff would likely be faster than it was during the previous normalization episode.

Among blue chips, Tokyo Electron, Advantest and Screen Holdings all lost around 4%. Sony Group slumped 7%. Uniqlo clothing shop owner Fast Retailing gave up 4.9% after posting a 11% drop in December same-store sales

ECONOMIC NEWS: Japan Service Sector PMI Indicates Moderate Expansion In Business Activity In December- The Japanese service sector witnessed a softer expansion at the end of 2021. Both the activity and new orders indices signalled softer, yet still moderate rates of growth in December, as businesses continued to report a steady recovery in demand. The seasonally adjusted Japan Services Business Activity Index dipped from 53.0 in November to 52.1 in December to indicate a moderate expansion in business activity. Despite the slight easing in the growth rate, the average reading over the final quarter was the strongest quarterly performance since the third quarter of 2019.

The headline figure is the Services Business Activity Index, which tracks changes in the volume of business activity compared with one month previously. A reading above 50 indicates an overall increase compared to the previous month, and below 50 an overall decrease. Despite firmer demand conditions, firms struggled to fill available vacancies, which contributed to a further slight reduction in employment. Moreover, concerns about the potential for new variants of COVID-19 clouded the 2022 outlook for business activity, with the degree of optimism softening to the lowest for three months.

The au Jibun Bank Japan Composite PMI Output Index - which measures combined output in the manufacturing and services sectors - dipped from 53.3 in November to 52.5 in December to signal a softer, yet still moderate expansion in Japanese private sector output. As a result, the average reading in the final quarter marked the strongest quarterly performance since the fourth quarter of 2018. Both manufacturing and services firms reported a softening in growth rates in December.

CURRENCY NEWS: The Japanese yen traded at 115.93-96 per dollar, compared with 116.05-15 in New York and 116.03-04 in Tokyo on Wednesday.

Powered by Capital Market - Live News