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Nikkei snaps four-day rally as inflation jitters return

05/19/2022 | 02:31am EDT

TOKYO, May 19 (Reuters) - Japan's Nikkei share average snapped a four-session rally on Thursday after Wall Street plunged overnight on fears that surging inflation would eat into corporate profits and usher in an economic slowdown.

Dragged down by losses in market heavyweight Fast Retailing, the Nikkei closed 1.89% lower at 26,402.84 and posted its biggest drop since May 9. The broader Topix slipped 1.31% to 1,860.08.

"With U.S. shares losing momentum, it was hard for Japanese shares to rise," said Seiichi Suzuki, chief equity market analyst at Tokai Tokyo Research Institute.

"But the Nikkei is relatively firm as it has not touched a bottom hit in March. That is because in part the weaker yen makes Japanese shares look cheaper and lifted corporate profits."

U.S. stock indexes plunged on Wednesday after Target's earnings showed the toll of rising price pressures, sending the retailer's shares down by a quarter and deepening worries about the impact of inflation on the U.S. economy.

It was the worst one-day loss for the S&P 500 and Dow Jones Industrial Average since June 2020.

In Tokyo trading, Uniqlo-owner Fast Retailing fell 3.12% and chip-making equipment maker Tokyo Electron lost 3.42%. Technology start-up investor SoftBank Group dropped 1.6%.

All but two of the 33 industry sub-indexes on the Tokyo Stock Exchange fell, with shipping firms leading the losses.

Auto and parts makers lost 1.81% as Toyota Motor and its affiliate Denso slipped 1.91% and 2.22%, respectively.

Nintendo slipped 0.19% after a filing showed Saudi Arabia-Linked public investment fund owned a 5.01% stake in the game maker.

Staffing agency Recruit Holdings fell 4.14% and was the worst performer among the top 30 core Topix names, followed by retailer Seven & i Holdings, which lost 4.00%. (Reporting by Junko Fujita; Editing by Subhranshu Sahu)

© Reuters 2022
Stocks mentioned in the article
ChangeLast1st jan.
DENSO CORPORATION 2.52% 7050 Delayed Quote.-27.83%
FAST RETAILING CO., LTD. -0.12% 68000 Delayed Quote.4.24%
NINTENDO CO., LTD. -0.53% 58420 Delayed Quote.9.47%
RECRUIT HOLDINGS CO., LTD 4.19% 4178 Delayed Quote.-42.48%
SEVEN & I HOLDINGS CO LTD 1.59% 5360 Delayed Quote.4.35%
SOFTBANK GROUP CORP. 0.84% 5388 Delayed Quote.-1.67%
TOKYO ELECTRON LTD 1.90% 42820 Delayed Quote.-36.60%
TOYOTA MOTOR CORPORATION 2.28% 2105 Delayed Quote.-2.26%
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