TOKYO, Sept 30 (Reuters) - Japanese stocks fell sharply on Friday, posting their biggest monthly drop since the COVID-19 pandemic first rocked markets 2-1/2 years ago, tracking overnight Wall Street losses.
The Nikkei share average closed down 1.83% at 25,937.21, its lowest close since July 1. The index shed 7.669% in September, its biggest monthly decline since March 2020.
The broader Topix fell 1.76% to also record its worst month since March 2020.
All three major U.S. stock indexes fell overnight on heightened fears of a recession and a report that Apple Inc has cancelled a planned boost in iPhone 14 production.
"Yesterday's news about Apple suspending its production increase caused the market to factor in a global recession," Tokai Tokyo Research Institute senior strategist Takashi Nakamura said.
"Even if the economy is expected to improve in Japan, overseas trends will make it difficult for investors to buy Japanese stocks alone."
"I think the falls in U.S. stocks were an overreaction," said Eiji Kinouchi, chief technical analyst, Daiwa Securities, adding the same could be true of Japan, citing a gap between supply and demand at the end of the month.
Every sector on the Nikkei fell except real estate, which gained 0.54%. Of the index's 225 constituents, 186 declined, 35 advanced, and four traded flat.
Unitika Ltd, up 2.41%, and Oki Electric Industry Co Ltd, up 1.84%, were among the best performers on the Nikkei. Both stocks are set to be removed from the index after this week.
Shinsei Bank Ltd jumped 6.96%, after a report in the Nikkei newspaper's online edition that SBI Holdings has applied for approval as a bank holding company, allowing it to increase its stake in the bank to more than 50%.
Automakers were among the worst performers, led by Mazda Motor Corp, down 8.17%. Mitsubishi Motors Corp , Nissan Motor Co Ltd, and Subaru Corp followed suit.
Clothing giant and Uniqlo parent company Fast Retailing Co Ltd weighed on the index the most, falling 3.58%. (Reporting by Sam Byford and Tokyo markets team; Editing by Rashmi Aich)
