TOKYO (Kyodo) — The Nikkei stock index suffered a fifth day of losses Monday as concerns over the U.S. economic outlook stirred heavy selling of tech shares, but declines were later trimmed on a weakening yen.
The benchmark lost over 3 percent at one point in the morning, pressured by plunges on Wall Street late last week as a smaller-than-expected rise in new jobs in U.S. nonfarm payrolls in August rekindled fears of a recession in the world’s largest economy.
The 225-issue Nikkei Stock Average ended down 175.72 points, or 0.48 percent, from Friday at 36,215.75, its lowest close since Aug. 9. The broader Topix index finished 17.69 points, or 0.68 percent, lower at 2,579.73.
On the top-tier Prime Market, decliners were led by transportation equipment, insurance and marine transportation issues.
The U.S. dollar rebounded to the lower 143 yen range in Tokyo after falling to the upper 141 yen level in New York on Friday. The jobs data also showed an improvement in the unemployment rate, fueling expectations that the pace of a possible contraction in the U.S. economy may slow.
“The data raised prospects the Federal Reserve is likely to cut interest rates by 0.25 percentage point rather than 0.50 point,” said Takuya Kanda, senior researcher at the Gaitame.com Research Institute, adding that such a move, already priced in by the market, is likely to support the dollar.
At 5 p.m., the dollar fetched 143.15-17 yen compared with 142.11-21 yen in New York and 142.51-54 yen in Tokyo at 5 p.m. Friday.
The euro was quoted at $1.1059-1060 and 158.30-34 yen against $1.1081-1091 and 157.70-80 yen in New York and $1.1116-1117 and 158.43-47 yen in Tokyo late Friday afternoon.
The yield on the benchmark 10-year Japanese government bond ended 0.045 percentage point higher than Friday’s close at 0.890 percent. The debt was sold, sending yields higher, amid the view the Fed will not make a deeper rate cut in September.
On the equities market, the Nikkei index shed over 1,100 points in the morning as chip shares like Tokyo Electron and Shin-Etsu Chemical led declines, tracking sharp losses in their U.S. counterparts.
But most of the losses were erased in the afternoon, as the yen’s depreciation helped improve sentiment for exporters that benefit from a weaker yen, which boosts their overseas profits when repatriated.
Rising U.S. futures also provided relief to investors, brokers said.
“Currency market developments gave investors a chance to reflect that they may have overreacted in their selling after the jobs report, which wasn’t all bad and offered signs a soft landing is achievable,” said Toshikazu Horiuchi, an equity strategist at IwaiCosmo Securities Co.
