TOKYO: Japan’s Nikkei share average slumped more than 1% on Wednesday, weighed down by a fall in heavyweight Fast Retailing, owner of the Uniqlo store chain, and overnight declines on Wall Street.
Tech stocks tracked a slide among US peers, but a powerful quake that rocked Taiwan had only a limited impact on Japanese chip shares.
The Nikkei lost 1.03% to 39,428.58 as of the midday break, after earlier dipping to the lowest since March 18 at 39,217.04.
Fast Retailing, which is the most heavily-weighted stock in the index by a wide margin, lost 3.79% to be the biggest drag, contributing 172 basis points of the Nikkei’s total 410 point decline.
The stock tumbled from a record high reached earlier in the week after the company announced late Tuesday its first year-on-year sales decline at domestic Uniqlo outlets for three months.
Big tech names like chip-testing equipment maker Advantest dropped 1.34%, while Nintendo lost more than 3%.
Artificial intelligence-focused startup investor SoftBank Group slid 1.39%.
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Tech shares underperform when borrowing costs rise, and US long-term Treasury yields jumped to the highest since November at more than 4.4% overnight.
The broader and less tech-weighted Topix index slipped 0.49%, with an index of growth stocks tumbling 1% while value shares were flat.
The Nikkei has also succumbed to profit taking at the start of Japan’s new fiscal year this month, said Shoki Omori, chief Japan desk strategist at Mizuho Securities.
Japan’s stock benchmark hit an all-time high of 41,087.75 on March 22, after the Bank of Japan (BOJ) raised interest rates for the first time since 2007 but kept a dovish stance on further tightening.
“I would say there’s going to be dip buying and the Nikkei could test 41,000 again (this month), unless US yields keep going higher and tech stocks keep underperforming,” Omori said.
“I don’t think the Nikkei will go below 37,500,” he added.
“For the BOJ, keeping easy financial conditions should be the way to support markets when external factors are pushing down equities with force.”
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