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Nikkei succumbs to global pressure as pandemic worries resurface

09/24/2020 | 03:25am EDT

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.

"It's 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 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 lost 1.08% to 1,626.44, with cyclicals such as steelmakers and carmakers hit the most.

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

Elsewhere, Sumitomo Mitsui Trust dropped 3.1%, hit by concerns about reputational damages after the Japanese company made errors in vote-counting of shareholders' meetings it administers.

Hitachi Transport System lost 4.7% and SG Holdings fell 1.3% following a media report that the two firms will cancel capital alliance.

Investor 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 gained 1.2% while optical products maker Hoya Corp rose 1.5% and Sysmex, a medical equipment firm, added 0.4%.

Nikkei's losses were smaller than the 2.37% drop in U.S. S&P500, 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) (Reporting by Hideyuki Sano, Editing by Sherry Jacob-Phillips and Uttaresh.V)

ę Reuters 2020
Stocks mentioned in the article
ChangeLast1st jan.
DJ INDUSTRIAL -0.27% 34299.33 Delayed Quote.12.65%
HITACHI TRANSPORT SYSTEM, LTD. -0.77% 3880 End-of-day quote.26.38%
HONDA MOTOR CO., LTD. 1.17% 3626 End-of-day quote.26.01%
HOYA CORPORATION 1.07% 14180 End-of-day quote.-0.63%
JFE HOLDINGS, INC. -1.32% 1342 End-of-day quote.35.83%
NASDAQ 100 -0.69% 14030.407713 Delayed Quote.9.62%
NASDAQ COMP. -0.71% 14072.856459 Delayed Quote.9.98%
NIKKEI 225 0.96% 29441.3 Real-time Quote.6.26%
NIPPON STEEL CORPORATION -1.41% 1921.5 End-of-day quote.44.69%
OLYMPUS CORPORATION 1.32% 2373.5 End-of-day quote.5.19%
S&P 500 -0.20% 4246.59 Delayed Quote.13.29%
SG HOLDINGS CO.,LTD. 1.76% 2781 End-of-day quote.-1.10%
SUBARU CORPORATION 1.84% 2292.5 End-of-day quote.11.15%
SUMITOMO MITSUI FINANCIAL GROUP, INC. 0.54% 3920 End-of-day quote.22.96%
SUMITOMO MITSUI TRUST HOLDINGS, INC. 0.91% 3662 End-of-day quote.15.27%
SYSMEX CORPORATION 2.04% 11755 End-of-day quote.-5.20%
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