Japan Market extends losses

September 22,2021

Japan stock market finished lower for second straight session on Wednesday, 22 September 2021, as risk aversion continued selloff triggered amidst lingering worries about contagion sweeping financial markets from the potential collapse of Chinese real estate conglomerate Evergrande Group and caution ahead of the outcome of the US Federal Reserve's monetary policy meeting.

At closing bell, the 225-issue Nikkei Stock Average fell 200.31 points, or 0.67%, to 29,639.40. The broader Topix index of all First Section issues on the Tokyo Stock Exchange dropped 21 points, or 1.02%, to 2,043.55.

Trading volume turnover on the main section stood at 1.20 billion shares worth 2.89 trillion yen on Tuesday.

Total 29 of 33 industry groups declined on the Topix, with major declining issues were Wholesale Trade (down 2.4%), Foods (down 1.9%), Machinery (down 1.7%), Chemicals (down 1.5%), Metal Products (down 1.4%), and Glass & Ceramics Products (down 1.4%), while Marine Transportation (up 1.1%) issue was top gainer, followed by Real Estate (up 1%) issue.

Investors were cautiously awaiting for the conclusion of the U.S. Federal Reserve's highly anticipated September meeting with eyes on indications about the Fed's tapering of its easy monetary policy. The Fed Chairman Jerome Powell has said previously that tapering could occur this year, but investors are waiting for more details, particularly after mixed economic data released since Powell's last comments.

Shares of machinery makers were weak, with Fanuc sliding 2.8% to 24,865 yen, Hitachi Construction Machinery shedding 3% to 3,095 yen.

Mizuho Financial Group declined 1.2% to 1,582.50 yen following reports that Japan's financial regulators plan to issue a business improvement order to the group and its banking arm Mizuho Bank over a string of system failures this year.

Mitsubishi UFJ Financial Group rose 1.4% to 641.50 yen after it said Tuesday it will sell most of its American banking unit MUFG Union Bank to U.S. Bancorp in a deal worth around $17.6 billion.

ECONOMIC NEWS: Bank of Japan maintained a status quo on short-term interest rates and issued a bleak commentary on factory output and exports. The Bank of Japan on Wednesday held steady on monetary policy, keeping its short-term interest rate target at -0.1% while that for 10-year Japanese government bond yields was kept at around 0%. The Japanese central bank warned in its monetary policy statement that the employment and income situation “remained weak” due to the Covid impact, while private consumption has “remained stagnant” due to sustained strong downward pressure on services consumption.Weak inflation and weak consumption amidst supply chain disruptions dampened sentiment but also reinforced expectations that the central bank may not follow its global peers in immediate rollback of pandemic-era stimulus.

CURRENCY NEWS: The U.S. dollar edged up slightly to the mid-109 yen range on Wednesday. The Japanese yen traded at 109.51 per dollar, having strengthened from around 110 against the greenback earlier this week.

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