Refinitiv Newscasts - Asia Insight: Japan's Nikkei falls to 3-week low on new-strain COVID worries

Nomura

22/12/2020 08:30

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Source: Reuters

Description: Nikkei plumbed three-week lows, as investors took profits from
stellar gains over the past couple of months.
They're concerned that a
fast-spreading new coronavirus strain found in Britain could disrupt a swift
global economic recovery.
The benchmark index suffered its biggest drop in
about a month, to end the session at its lowest close since late November.
Short Link: https://refini.tv/3axzBpc

Video Transcript:

Hello and welcome to your Japan edition of Asia Insight. I am Angeline Ong.
Let's check on the action and Japan's equity markets first - the Nikkei plum
three-week lows as investors took profits from stellar gains of the past
couple of months. They’re concerned that the fast spreading new
coronavirus strain found in Britain could disrupt a swift global economic
recovery. The benchmark index suffered its biggest drop in about a month
session to end the session at its lowest close since late November. Now,
across the rest of Asia, those worries about COVID are also impacting investor
confidence. John Milroy, an Investment Advisor at Ord Minnett, a Sydney-based
stockbroker, says “Any selling is probably not going to find much
resistance. The clients I speak to are more inclined to be locking in some
gains than piling in more money.” Oil, too, is reacting to the new
strain, falling again on Tuesday after steep losses in the previous session.
Both benchmark contract slid nearly 3% on Monday, partly erasing recent strong
gains on the back of the roll out of COVID-19 vaccines - seen as key to easing
mobility restrictions. Now, Stephen Innes, Chief Market Strategist at Axi says
the nightmare before Christmas scenario has set in with the combination of the
mutant virus compounded by a Brexit angst. Japan's government has cut its view
on consumption for the first time in three months. It says overall economic
conditions are still severe due to the pandemic. The economy fell into its
first recession since 2015, earlier this year. And it looks like the road to
recovery will be bumpy one. Mayu Yoshida has more. 

Cold weather is putting pressure on Japan's virus measures as well as its
economic outlook. It was only last month when the Bank of Japan survey
surprised us when it showed Japan becoming the latest major economy to bounce
back from the pandemic induced slump. But that recovery was short-lived
because recent data this month shows both big and small manufacturers in Japan
expecting the economy to worsen in the coming month because of the higher Yen,
less salaries and slower exports. Now, to fight the coronavirus, the cabinet
this month approved a record budget for next fiscal year that tops $1
trillion. And they also raised its 2021 GDP forecast to around 4% growth. So,
we shall see of this stimulus package can really speed up the recovery or just
add to the country's mounting debt. 

Now, the Nikkei newspaper says Prime Minister Suga has told the Ministry of
Finance to make sure the Yen does not fall below JPY100 to the Dollar. Suga is
reported to have made the comment after the US presidential election in early
November. He may have been concerned about any market repercussions from Joe
Biden’s victory. Suga’s instruction is almost certain to attract the
attention of speculators looking to test the government's resolve. Japan's
government has approved a rise in military spending with an increase to
JPY5.34 trillion, nearly $152 billion to fund the development of an advance
stealth fighter and longer-range anti-ship missile to counter China's growing
military power. A planned jet fighter, the first in three decades, is expected
cost around $40 billion and be ready in the 2030s. Now, look at some companies
in the news then and SoftBank is trying to raise more than half a billion
through a new listing, a vehicle known as a blank check company. The launch of
this special purpose acquisition could appeal to investors after earlier
efforts to raise capital for second division flaunted. It’s the end of an
era for Nomura. The bank will no longer employed financial advisors in its
retail division. It plans to move more than 1,500 employees to other roles
from April. Now, the move comes amid a turnaround program announced last year,
when Nomura suffered its first annual lost in a decade. And that's it from
your Japan Focus on Asia Insight. I’m Angeline Ong and this is Reuters