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Nikkei succumbs to global pressure as pandemic worries resurface

Published 2020/09/24, 09:25
Updated 2020/09/24, 09:30
© Reuters.

TOKYO, Sept 24 (Reuters) - Japanese shares succumbed to broad selling pressure in global stocks on Thursday following worries about their high valuation, resurgent coronavirus infections and the spectre of a slowdown in budding economic recoveries worldwide.

Uncertainties over U.S. presidential elections added burden as President Donald Trump declined to commit to a peaceful transfer of power if he loses the Nov. 3 election. not clear what is going to happen to the election. If people still have (long) positions, I suspect they will close them rather than betting on the markets hitting new highs," said a senior trader at a major Japanese bank.

Nikkei share average .N225 lost 1.11% to 23,087.82, falling below a key support from its 25-day average at 23,217 to its lowest finish in half a month.

The broader Topix .TOPX lost 1.08% to 1,626.44, with cyclicals such as steelmakers .ISTEL.T and carmakers .ITEQP.T hit the most.

Nippon Steel 5401.T lost 4.1% while rival JFE Holdings 5411.T tanked 6.1%. Among carmakers, Honda 7267.T lost 4.2% while Subaru 7270.T shed 3.0%.

Elsewhere, Sumitomo Mitsui Trust 8309.T dropped 3.1%, hit by concerns about reputational damages after the Japanese company made errors in vote-counting of shareholders' meetings it administers. Transport System 9086.T lost 4.7% and SG Holdings 9143.T fell 1.3% following a media report that the two firms will cancel capital alliance. caution was palpable with so-called quality stocks, those with steadier earnings outlook, outperforming the overall market, said Yuya Fukue, trader at Rheos Capital Works.

Among the quality stocks, endoscope maker Olympus 7733.T gained 1.2% while optical products maker Hoya Corp 7741.T rose 1.5% and Sysmex 6869.T , a medical equipment firm, added 0.4%.

Nikkei's losses were smaller than the 2.37% drop in U.S. S&P500 .SPX , however, partly due to expectations of big re-investment flows from dividend next week.

"We have 800 billion yen ($7.59 billion) of reinvestment expected. That is big," said Fukue at Rheos. ($1 = 105.41 yen)

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