Japan Indexes Plunged 4% After U.S. Tech Stocks Dived

Akira Ito
04 Sep, 2024
Tokyo

Japan's market indexes dropped sharply following overnight losses in New York led by tech stocks after an economic slowdown worries resurfaced. 

The Nikkei 225 plunged as much as 5.3% and the Topix index dropped nearly 4% as investors sold stocks after semiconductor equipment makers led the decliners. 

Market sentiment in Tokyo weakened following the losses in overnight trading in New York and Europe after a private survey of manufacturing activities showed weakening growth for the fifth month in a row. 

The S&P 500 index dropped more than 2%, the technology-focused Nasdaq Composite declined more than 3%, and indexes in Europe dropped as much as 1% in active trading. 

The fears of an economic slowdown gripped market sentiment again after five weeks, when a slowdown in payroll additions plunged market indexes around the world. 

However, those fears of an economic slowdown in the U.S. were set aside over the next three weeks after a string of positive data suggested that the economy continues to expand and inflation remains subdued. 

Investors shifted their attention to the release of the nonfarm payroll report on Friday, and if the U.S. economy adds less than 125,000 net new jobs in August, market indexes may face additional selling pressure. 

Closer to home, Japan's service sector growth moderated in August, according to the final estimate conducted by au Jibun Bank. 

The au Jibun Bank Japan Services PMI moderated to 53.7 from the preliminary estimate of 54.0, S&P Global said in a report released Wednesday. 

The service sector activities expanded for the seventh month in a row, and the rate of change matched the previous month's rate. 

 

Japan Stock Movers 

The Nikkei 225 Stock Average plunged 4.3% to 37,011.80, and the broader Topix index declined 3.7% to 2,632.80. 

Tech-led sell-off in Tokyo quickly spread to other sectors amid worries of strengthening the yen. 

Tokyo Electron declined 8.6% to ¥22,995.0, Advantest fell 7.7% to ¥6,129.0, Screen Holdings plunged 9% to ¥9,668.0, and SoftBank Group decreased 7.7% to ¥7,781.0. 

Renesas Electronics dropped 8.9% to ¥2,265.0 and Socionext fell 9.1% to ¥2,837.50. 

Sumitomo Mitsui Financial Group decreased 4.5% to ¥9,415.0, Mitsubishi UFJ Financial Group dropped 5.6% to ¥1,509.0, and Mizuho Financial Group eased 5.2% to ¥2,974.0. 

The yen strengthened to 145.09 after the Bank of Japan reiterated its hawkish stance and said that the central bank is prepared to lift rates if inflation data warrants such a move. 

Toyota Motor decreased 3.5% to ¥2,674.0, Honda Motor declined 4.6% to ¥1,530.0, and Nissan Motor plunged 3.8% to ¥413.50.