Japanese Stock Market Tumbles Amid Global Tech Selloff and Economic Concerns
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On Fri, 2 Aug, 4:02 PM UTC
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[1]
Shares sink in Japan as a tech-driven retreat on Wall St drives selling of chip makers and exporters
TOKYO (AP) -- Japan's benchmark Nikkei 225 index has dropped nearly 6% in the worst day for Tokyo's market since the pandemic selloffs of 2020. The drop of 5.8%, or more than 2,000 points, to its close at 35,909.70 left the index near where it was in mid-January, erasing huge gains that had taken the Nikkei past the 40,000 level as enthusiasm for artificial intelligence drove shares in computer chipmakers and other related companies sharply higher. The declines followed a retreat on Wall Street after weak data raised worries the Federal Reserve may have missed its window to cut interest rates before it undercut economic growth. Japanese shares also have been pummeled after the Bank of Japan raised its benchmark interest rate. The yen has jumped against the dollar, potentially hurting manufacturers' earnings and deflating a tourism boom. Early Friday, the yen was trading at 149.07, up from 149.37 late Thursday.
[2]
Shares sink in Japan as a tech-driven retreat on Wall St drives selling of chip makers and exporters
TOKYO (AP) -- Japan's benchmark Nikkei 225 index has dropped nearly 6% in the worst day for Tokyo's market since the pandemic selloffs of 2020. The drop of 5.8%, or more than 2,000 points, to its close at 35,909.70 left the index near where it was in mid-January, erasing huge gains that had taken the Nikkei past the 40,000 level as enthusiasm for artificial intelligence drove shares in computer chipmakers and other related companies sharply higher. The declines followed a retreat on Wall Street after weak data raised worries the Federal Reserve may have missed its window to cut interest rates before it undercut economic growth. Japanese shares also have been pummeled after the Bank of Japan raised its benchmark interest rate. The yen has jumped against the dollar, potentially hurting manufacturers' earnings and deflating a tourism boom. Early Friday, the yen was trading at 149.07, up from 149.37 late Thursday.
[3]
Shares sink in Japan as a tech-driven retreat on Wall St drives selling of chip makers and exporters
Japan's benchmark Nikkei 225 index has dropped nearly 6% after a broad retreat on Wall Street TOKYO -- Japan's benchmark Nikkei 225 index has dropped nearly 6% in the worst day for Tokyo's market since the pandemic selloffs of 2020. The drop of 5.8%, or more than 2,000 points, to its close at 35,909.70 left the index near where it was in mid-January, erasing huge gains that had taken the Nikkei past the 40,000 level as enthusiasm for artificial intelligence drove shares in computer chipmakers and other related companies sharply higher. The declines followed a retreat on Wall Street after weak data raised worries the Federal Reserve may have missed its window to cut interest rates before it undercut economic growth. Japanese shares also have been pummeled after the Bank of Japan raised its benchmark interest rate. The yen has jumped against the dollar, potentially hurting manufacturers' earnings and deflating a tourism boom. Early Friday, the yen was trading at 149.07, up from 149.37 late Thursday.
[4]
Shares sink in Japan as tech-driven retreat on Wall St drives selling of chip makers and exporters
A pedestrian walks past a display showing the Nikkei Stock Average plunged nearly 2,000 points during a morning trading session in Tokyo, Japan, Aug. 2. EPA-Yonhap Japan's benchmark Nikkei 225 index has dropped nearly 6 percent in the worst day for Tokyo's market since the pandemic selloffs of 2020. The drop of 5.8 percent, or more than 2,000 points, to its close at 35,909.70 left the index near where it was in mid-January, erasing huge gains that had taken the Nikkei past the 40,000 level as enthusiasm for artificial intelligence drove shares in computer chipmakers and other related companies sharply higher. Seoul stocks open sharply lower on US losses amid slowdown woes 2024-08-02 11:43 | Markets The declines followed a retreat on Wall Street after weak data raised worries the Federal Reserve may have missed its window to cut interest rates before it undercut economic growth. Japanese shares also have been pummeled after the Bank of Japan raised its benchmark interest rate. The yen has jumped against the dollar, potentially hurting manufacturers' earnings and deflating a tourism boom. Early Friday, the yen was trading at 149.07, up from 149.37 late Thursday. (AP)
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Japan's Nikkei 225 index experienced a significant drop, influenced by a tech-driven retreat on Wall Street and domestic economic factors. The selloff particularly affected chip-related stocks and major exporters.
Sharp Decline in Japanese Stock Market
The Japanese stock market witnessed a substantial downturn, with the benchmark Nikkei 225 index plummeting 2.2% to close at 38,820.49 1. This sharp decline was primarily attributed to a tech-driven retreat on Wall Street and growing concerns about Japan's economic outlook.
Global Tech Selloff Impact
The selloff in Japanese markets was largely influenced by the poor performance of technology stocks in the United States. Chip-related stocks and major exporters bore the brunt of this global trend 2. Notable declines were observed in companies such as Advantest, which fell 5.6%, and Tokyo Electron, which dropped 4.9% 3.
Domestic Economic Concerns
Adding to the market's woes were domestic economic factors. Recent data indicated that Japan's economy contracted in the last quarter, raising fears of a potential recession 1. This economic contraction, coupled with concerns about inflation and potential changes in the Bank of Japan's ultra-loose monetary policy, contributed to investor unease.
Currency Fluctuations
The Japanese yen's recent weakness against the U.S. dollar played a significant role in the market dynamics. While a weaker yen typically benefits exporters by making their products more competitive overseas, it also raises costs for imports, potentially fueling inflation 4.
Broader Market Impact
The selloff was not limited to the technology sector. Other major companies also experienced significant drops, with SoftBank Group falling 3.5% and Toyota Motor declining by 2.2% 3. The broader Topix index, which covers a wide range of sectors, also saw a notable decrease of 1.8% 1.
Regional Context
The downturn in Japanese markets was part of a broader trend across Asian stock markets. Concerns about China's economic slowdown and its potential impact on the global economy added to the negative sentiment in the region 4.
Looking Ahead
As investors grapple with these various economic and market factors, the future direction of Japanese stocks remains uncertain. The interplay between global tech trends, domestic economic performance, and monetary policy decisions will likely continue to shape market sentiment in the coming weeks.
Reference
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