Nikkei drops after weak business sentiment data

Japanese share market closed down on the first day of the Japanese new financial year, Wednesday, 01 April 2015, as profit booking continued on second straight day after release of worse-than-expected Bank of Japan's tankan survey of business sentiment. A weaker dollar also fuelled selloff in the market. The benchmark Nikkei 225 index lost 172.15 points, or 0.9%, to finish at 19034.84, while the broader Topix index of all first-section shares fell 0.92%, or 14.12 points, to 1528.99.

The Bank of Japan Wednesday released its quarterly Tankan business survey for March on Wednesday, showing the diffusion index measuring sentiment among big manufacturers was unchanged at plus 12 from the December quarter. Looking ahead, the diffusion index for big manufacturers is expected to worsen to 10 in June. The diffusion index for non-manufacturers including retailers and construction firms improved slightly to 19 from 17, apparently due to benefits from greater numbers of foreign tourists visiting Japan. But, index for non-manufacturers expected to worsen by 2 points to 17 in June quarter. The diffusion indexes represent the percentage of companies reporting favorable business conditions minus the percentage reporting unfavorable environments. The latest tankan showed companies plan to reduce capital spending by nearly 5% in this fiscal year, which ends March 31, 2016. The companies expect to cut spending on land purchases by nearly 37%.

 

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