Tokyo stocks close lower as tech issues follow US peers’ retreat

Tokyo stocks closed lower Wednesday, as technologyrelated shares weighed on the market following their US peers’ retreat on Wall Street overnight.

The 225-issue Nikkei Stock Average dropped 484.33 points, or 1.61 percent, from Monday to close the day at 29,671.70.

The broader Topix index of all First Section issues on the Tokyo Stock Exchange, meanwhile, lost 35.28 points, or 1.82 percent, to finish at 1,903.07.

Trading in Japan took its lead from the tech-heavy US Nasdaq composite index closing lower overnight with the index’s counterparts here also coming under selling pressure, local brokers said.

According to the brokers the turn to selling is likely a correction after high-capped issues, like tech shares, have been propping up the Nikkei recently.

“Selling is concentrated on the high-priced issues that have been pushing the Nikkei up so far. The move reflects an adjustment for the overheated market,” Koichi Fujishiro, a senior economist at Dai-ichi Life Research Institute, was quoted as saying.

But the market sentiment remains underpinned by hopes for US stimulus to help boost the pandemic-hit economy, with expectations for the early passage of US President Joe Biden’s $1.9-trillion stimulus plan still high, along with belief the Federal Reserve will maintain its accommodative monetary policy, strategists said.

“As hopes for normalization in the global economy remain strong, the market is expected to remain solid for the time being,” Maki Sawada, a strategist at Nomura Securities Co.’s Investment Content Department, was quoted as saying.

By the close of play, electrical appliance, precision instrument, and information and communication issues comprised those that declined the most.

Chip-related issues followed their US counterparts lower, with Shin-Etsu Chemical losing 4.3 percent, while Screen Holdings slumped 7.3 percent. Murata Manufacturing, meanwhile, ended the day 5.9 percent lower.

Nidec dropped 4.3 percent, while Tokyo Electron also came under selling pressure, dropping 1.8 percent.

Transportation and retail issues gained ground, however, on reports the central government will hold discussions on the possible early lifting of COVID-19-related restrictions in some regions put in place under a state of emergency issued last month.

As such, Japan Airlines rose 4.7 percent, while ANA Holdings added 3.3 percent. Central Japan Railway ended 1.9 percent higher, while East Japan Railway advanced 1.8 percent.

Among retailers gaining, J.Front Retailing climbed 5.85 percent, while Isetan Mitsukoshi Holdings and Takashimaya both closed around 5.7 percent higher.

Issues that fell outpaced those that rose by 1,523 to 605 on the First Section, while 66 ended the day unchanged.

On the main section on Wednesday, 1,570.41 million shares changed hands, rising from Monday’s volume of 1,250.43 million shares.

The turnover came to 3,461.337 billion yen ($32.715 billion).