Japan's Nikkei Hits a More Than 2-Month Low Amid Growing Concerns About China

16 Aug, 2023

Japan's Nikkei Hits a More Than 2-Month Low Amid Growing Concerns About China

Japan's Nikkei stock average reached its lowest point in over two months on Wednesday due to concerns about China's economic prospects dampening risk appetite. Additionally, banking shares experienced a decline following reports of a potential downgrade of major US banks.

As of 0220 GMT, the Nikkei index was down by 1.03% at 31,907.72 after briefly touching 31,784.91 earlier in the session. This marked its lowest level since July 12. The broader Topix index also experienced a loss of 0.91%, settling at 2,269.56.

Shigetoshi Kamada, General Manager at Tachibana Securities' research department, explained that worries about the global economy arose due to the dim outlook of one of the world's largest economies. These concerns had an impact on Japanese shares at a time when significant market-moving cues were lacking in Japan.

Chinese economic data from Tuesday underscored the increasing pressures on China's economy from various directions. In response, Beijing decided to reduce key policy rates in an effort to stimulate economic activity. Kamada added that the report about a potential Fitch downgrade of US banks further diminished risk appetite.

The banking index witnessed a drop of nearly 2% as US counterparts like JPMorgan Chase and Bank of America declined following reports suggesting that ratings agency Fitch might downgrade multiple US banks. Mitsubishi UFJ Financial Group saw a decline of 2.41%, Sumitomo Mitsui Financial Group lost 1.41%, and Mizuho Financial Group slipped 1.71%. Notably, Fast Retailing, the owner of the Uniqlo brand, contributed to Nikkei's decline with a loss of 1.17%.

Among other sectors, technology investor SoftBank Group slipped by 2.83%, while Tokyo Electron, a chip-making equipment manufacturer, experienced a 0.8% loss. Energy-related stocks also experienced a decline, with refiners dropping by 2.42%. This made them the poorest performer among the 33 industry sub-indexes on the Tokyo Stock Exchange. Energy explorers also slid by 2.1%.

On a positive note, chip-testing equipment manufacturer Advantest managed to rise by 1.02%, providing some support to the Nikkei index.