Tokyo stocks end lower for 4th day

Tokyo, The Gulf Observer: Tokyo stocks ended lower for a fourth day running on Tuesday amid persistent concerns that the U.S. Federal Reserve will keep interest rates high for longer than previously expected following strong manufacturing data from the world’s largest economy.

The 225-issue Nikkei Stock Average ended down 521.94 points, or 1.64 percent, from Monday at 31,237.94. The broader Topix index finished 38.97 points, or 1.68 percent, lower at 2,275.47.

On the top-tier Prime Market, all sectors fell, led by mining, oil and coal product and nonferrous metal issues.

The U.S. dollar continued to trade slightly below the psychologically important 150 yen line as the Japanese currency remained pressured by the prospect of a wider interest rate gap between Japan and the United States due to their central banks’ diverging policies.

The Nikkei index fell for a fourth consecutive day to its lowest level in four months to wipe off over 1,000 points since Wednesday last week, as fears over U.S. interest rates ate away at investor confidence in the market.

Concerns over the U.S. rate outlook were stoked after the ISM manufacturing index for September came in above market expectations Monday, adding to signs of strength in the world’s largest economy despite the Fed lifting borrowing costs to tame inflation.

“U.S. long-term rate rises are reducing the appeal of investing in stocks,” said Koichi Fujishiro, senior economist at the Dai-ichi Life Research Institute.

Higher bond yields raise borrowing costs for companies and weaken the relative attractiveness of equities.

Looking ahead, Fujishiro said, “Amid no sign of U.S. inflation coming down or interest rates being lowered, yields are likely to keep rising” and it is hard to see when the market will start favoring stocks over bonds again.

Energy-related companies were among the worst-performing issues due to falling U.S. crude oil futures.

Oil explorer Inpex slipped 144.5 yen, or 6.5 percent, to 2,080.5 yen and Japan Petroleum Exploration shed 320 yen, or 5.9 percent, to 5,130 yen.

Drug manufacturer Takeda Pharmaceutical fell after announcing its decision to withdraw a lung cancer treatment from the United States due to unsatisfactory outcomes from late-stage clinical trials. The drug has been sold after receiving a fast-track approval in 2021.

It lost 82 yen, or 1.8 percent, to 4,494 yen.