Japan stocks drop tracking Wall St losses on Powell's dour growth view

  • Reuters
  • Stock Market News
Japan stocks drop tracking Wall St losses on Powell's dour growth view
Credit: © Reuters.

SYDNEY, May 14 (Reuters) - Tokyo shares dropped on Thursday, in line with Wall Street, as the U.S. Federal Reserve chairman's comments about an extended period of weak economic growth offset optimism around the early lifting of Japan's coronavirus-driven state of emergency in some regions.

The benchmark Nikkei average .N225 declined 1.7% to 19,914.78, moving away from a two-month high hit earlier this week.

Wall Street's three major indexes fell on Wednesday due to worries about a second wave of COVID-19 infections and Fed Chair Jerome Powell's subdued view on the recovery of an economy battered by the coronavirus pandemic. .N

He vowed to use the central bank's power as needed, but also suggested that might not be enough to avoid deep economic damage without more fiscal support. futures for the S&P 500 ESc1 , which were last quoted down 0.5% in late Asian trade, dealt another blow to Tokyo shares.

Further fuelling investor worries, a top World Health Organization official said the virus may never go away. the domestic front, however, Japan is expected to lift a state of emergency across a large part of the country later on Thursday, but restrictions on Tokyo will likely remain, pending a convincing containment of the coronavirus. reopening of the economy to some extent is already priced into the market. That's why we're only down 15% year-to-date. The real question is whether we can keep this virus situation under control," said Masa Takeda, portfolio manager at Sparx Asset Management in Hong Kong.

"Longer term, we really have to reevaluate our investment - which companies will permanently suffer because of the virus and which companies are going to thrive."

The broader Topix .TOPX shed 1.9% to 1,446.55, also off Monday's two-month high, with all but one of the 33 sector sub-indexes on the Tokyo exchange finishing lower.

Highly cyclical sea transport .ISHIP.T , iron and steel .ISTEL.T and construction .ICNST.T were the three worst-performing sector sub-indexes on the main bourse.

Sony Corp 6758.T tumbled 3.9% after the company said its operating profit will likely drop at least 30% this financial year through March to the lowest in four years as the novel coronavirus outbreak damages demand. Denki Co Ltd 9831.T plunged 6.1% after the home electronics retailer cancelled its share buyback plans halfway through, citing a rapid deterioration of business environment caused by the pandemic. the overall market's weakness, Takeda Pharmaceutical Co Ltd 4502.T jumped 4.7% after the company booked a surprise operating profit and forecast that income would triple this financial year. also kept a watch on simmering U.S.-China tensions after U.S. President Donald Trump on Wednesday extended for another year an executive order barring U.S. companies from using telecommunications equipment made by firms posing a national security risk.

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