Japan: Nikkei extends losses on growth worries

Headline indices of the Japan share market declined for fourth straight session on Friday, 08 March 2019, as risk aversion selloff continued as the safe-haven yen strengthened amid heightening worries about global economic growth after the European Central Bank slashed its growth forecasts and launched an emergency round of policy stimulus. Investors digested a raft of local economic data, including Japan's GDP numbers for the fourth quarter. The reversal came in the same week that Canada's central bank took a sudden dovish turn and dismal data from Australia to the UK and the OECD lowering its global outlook instilled a sense of foreboding in markets. All 33 subsectors of the Tokyo Stock Exchange declined, with shares in Marine Transportation, Insurance, Securities & Commodities Futures, Machinery, Nonferrous Metals, and Glass & Ceramics Products issues being notable losers. Around late afternoon, the 225-issue Nikkei Stock Average fell 413.26 points, or 1.93%, at 21,042.75. The broader Topix index of all First Section issues on the Tokyo Stock Exchange dropped 26.84 points, or 1.68%, at 1,574.82.

ECB President Mario Draghi said the economy was in "a period of continued weakness and pervasive uncertainty" as he pushed out a planned rate hike and instead offered banks a new round of cheap loans.

 

The U.S. jobs report on Friday will provide the next clues on the health of global growth after ECB President Mario Draghi delivered fresh stimulus as he downgraded the outlook for the region's economy. The move came during a week that's seen China cut its goal for economic expansion, the Bank of Canada dial back its expectations for policy tightening, dismal data from Australia to the UK, and the Organisation for Economic Co-operation and Development lowering its global outlook.

On trade developments, US President Donald Trump said on Thursday that negotiations to resolve his eight-month trade war with China were making progress, expressing fresh optimism about resolving the confrontation between the world's largest economies. Trump told reporters at the White House that the talks were "moving along pretty well." Chinese and American officials have alternated between expressing optimism that a deal is at hand and also warning that much remains to be done to resolve the trade war, which has rattled markets and dented manufacturing sectors on both sides of the Pacific. The two nations have slapped painful tariffs on more than $360 billion in two-way trade since July, but citing progress in the negotiations, Trump last month said he was suspending plains to raise duty rates on $200 billion in Chinese goods.

On the economic news front, the Cabinet Office said in Friday's final reading that Japan's gross domestic product gained a seasonally adjusted 0.5% on quarter in the fourth quarter of 2018, following the 0.3% gain in the previous reading.

The Ministry of Finance said that Japan posted a current account surplus of 600.4 billion yen in January, up 1.4% from a year earlier, up from 452.8 billion yen in December. The trade balance showed a deficit of 964.8 billion yen, following the 216.2 billion yen surplus in the previous month. Exports were down 6.7% on year in January, while imports eased an annual 1.7%.

The Bank of Japan said that overall bank lending in Japan was up 2.3% on year in February, coming in at 533.7 trillion yen. That was down from 2.4% in January. Excluding trusts, bank lending was up 2.4% on year to 464.4 trillion yen - unchanged from the previous month.

CURRENCY NEWS: The Japanese yen appreciated against the dollar in the mid 111 yen zone on Friday.

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