Japan's Nikkei falls as global chip stocks drop, China COVID worries rise

Murata Manufacturing Co

28/12/2022 07:16

SINGAPORE, Dec 28 (Reuters) - Japanese stocks on
Wednesday retreated from last session's one-week highs, weighed
down by an overnight drop in global chip shares and worries over
China's COVID-19 situation.
    The Nikkei share average  .N225  ended down 107.37 points,
or 0.41%, at 26,340.50. The index has lost about 8.5% so far
this year, including December's 5.9% slide.
    The declines in shares of Uniqlo store operator Fast
Retailing  9983.T  and startup investor SoftBank Group Corp
 9984.T  weighed the most on the Nikkei. Softbank shares hit
their lowest in two months.
    Earlier in the day, the Bank of Japan released a summary of
opinions from its December 19-20 monetary policy meeting, in
which the central bank kept its ultra-easy policy but shocked
markets with a surprise tweak to its bond yield control,
allowing long-term interest rates to rise more.
    Norihiro Fujito, chief investment strategist at Mitsubishi
UFJ Morgan Stanley Securities, said the summary showing BOJ
board members discussed growing prospects that higher wages
could finally eradicate the risk of a return to deflation, was
"not being considered as a factor in the market".
    The policy tweak has pushed yields higher, stoked
expectations of wage increases and inflation and also pushed the
yen up, creating a conflicting mix of drivers for stocks.
    The dollar traded at 133.97 yen  JPY= , up 0.35% during the
session.
    Naka Matsuzawa, chief Japan macro strategist at Nomura, said
this week could see the after-effects of the BOJ's policy
surprise linger, "with this primarily appearing as speculation
that the Bank will raise short-term policy rates", which are
currently negative.
    "This speculation is the main driver behind unexpected JPY
appreciation and weakening in the stock market," he said.
    The broader Topix  .TOPX  ended down 0.06%, while the
Mothers Index  .MTHR  of start-up firm shares lost 1.23%.
 (Reporting by Tokyo markets team; Editing by Krishna Chandra
Eluri and Vinay Dwivedi)
 ((vidya.ranganathan@thomsonreuters.com; +65 6973 8261; Reuters
Messaging: Twitter:@Vid_Ranganathan))