Japan Nikkei tumbles on slowdown fears

Headline indices of the Japan share market closed steep lower on Monday, 25 March 2019, as risk aversion selloff triggered across the board on tracking negative clues from the US and European equities on Friday amid growing concerns of a slowdown in the global economy fuelled by downbeat economic data from the US and Europe, and a cautious tone from the Federal Reserve. All 33 subsectors of the Tokyo Stock Exchange declined, with shares in Oil & Coal Products, Pharmaceutical, Mining, Glass & Ceramics Products, Nonferrous Metals, Machinery, and Marine Transportation issues being notable losers. At closing bell, the 225-issue Nikkei Stock Average tumbled 650.23 points, or 3.01%, at 20,977.11. The broader Topix index of all First Section issues on the Tokyo Stock Exchange retreated 39.70 points, or 2.45%, at 1,57.41.

The rout in European and US stocks from Friday has continued in early Asian trade on Monday. The sharp falls reflect growing concern about the outlook for the global economy, sparked by soft PMI data from the Eurozone and United States in March that amplified concerns that the recent slowdown is becoming entrenched.

Stocks around the world were under pressure as investors fled to the safety of bonds after cautious remarks by the U.S. Federal Reserve last week on cooling economy sent the 10-year treasury yields below the three-month rate for the first time since 2007 embedding interest rate curve inversion. Traditionally, an inverted yield curve - where long-term rates fall below short-term - has signalled an impending recession. .

On US-China trade front, Negotiations between the two governments aimed at resolving the trade war will resume this week. Top US officials are due to hold talks with their Chinese counterparts in Beijing starting Thursday. A Chinese delegation is scheduled to go to Washington for further talks in early April. Negotiations had been on hold as the two sides tried to figure out how to overcome disagreements about how the United States would ensure China is abiding by any deal. US concerns about how China goes about getting hold of American technology and trade secrets have also been a sticking point.

CURRENCY NEWS: The Japanese yen, widely viewed as a safe-haven currency, strengthened to 110.05 against the dollar from lows above 110.6 last Friday, as fears of economic recession, fanned by inversion of the U.S. bond yield curve, sapped demand for higher-yield, growth reliant assets and drove investors toward safe destinations.

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