Japan's Nikkei pressured by drop in chip stocks, China worries

Murata Manufacturing Co

28/12/2022 04:07

SINGAPORE, Dec 28 (Reuters) - Japanese stocks on
Wednesday retreated from the one-week highs hit in the previous
session, weighed down by an overnight drop in global
semiconductor shares and lingering worries over China's COVID-19
situation.
    By mid-day, in thin year-end trading, the Nikkei Average
 .N225  was down 156.91 points, or 0.6%, at 26,290.96. Losses
for the year so far are around 8.7%.
    Traders said there was early selling of stocks after the
Nasdaq Composite  .IXIC  and the Philadelphia Semiconductor
Index (SOX), which have a high proportion of high-tech stocks,
fell on Tuesday. 
    Of the 33 industries on the Tokyo Stock Exchange, six
sectors rose, including electricity and gas as well as
insurance, while prices fell in 26 industries, including real
estate and air transportation.
    The declines in stocks of Fast Retailing  9983.T  and
SoftBank Group Corp  9984.T  weighed the most on the Nikkei.
Softbank shares hit their lowest in five days.
    Earlier in the day, the Bank of Japan released the minutes
of 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, so that long-term
interest rates can rise more.
    Norihiro Fujito, chief investment strategist at Mitsubishi
UFJ Morgan Stanley Securities, said those minutes, 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 so far".
    The policy tweak has pushed yields higher, stoked
expectations of wage rises and inflation and also pushed the yen
up, creating a conflicting mix of drivers for stocks.
    The dollar traded at 134.04 yen  JPY= , up 0.42% 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 (lift negative
rates)."
    "...this speculation is the main driver behind unexpected
JPY appreciation and weakening in the stock market."
    The largest percentage gainers on Wednesday were Hitachi
Zosen Corp  7004.T , up 2.09%, followed by IHI Corp  7013.T .
    The volume of shares traded on the Tokyo Stock Exchange's
main board  .TOPX  was 0.56 billion, compared to the average of
1.2 billion in the past 30 days. 
    The broader Topix  .TOPX  was down 0.28 %, while the Mothers
Index  .MTHR  of start-up firm shares lost 1.07% .  
 
 (Reporting by Tokyo markets team; Editing by Krishna Chandra
Eluri)
 ((vidya.ranganathan@thomsonreuters.com; +65 6973 8261; Reuters
Messaging: Twitter:@Vid_Ranganathan))