TOKYO — Japan’s Nikkei share average dropped on Friday and headed for its worst week since mid-June, with chip-related stocks leading the day’s decline in line with a slump on Wall Street overnight.
Shippers and other economically sensitive stocks also languished amid worries about continued Federal Reserve policy tightening that could trigger a recession.
The Nikkei dropped 1.12% to 26,210.69 as of the midday break, while the broader Topix lost 0.67% to 1,895.30. Of the Nikkei’s 225 components, 175 fell, 42 rose and eight were flat.
Utilities were a bright spot, with Tokyo Electric Power Company Holdings (TEPCO) surging 6.21% to become the Nikkei’s best performer, after the Japanese government adopted a new policy promoting greater use of nuclear energy. The Topix’s electric and gas subsector rallied 2.66%.
“For today, we expect the Nikkei to be weak, and what will be important is whether it can stay above 26,000,” Nomura strategist Maki Sawada said in a media call.
At the same time, a lot of technical indicators are now showing conditions are oversold, offering hope for a near-term rebound, she added.
The Nikkei is set to post a weekly drop of 4.78%, which would be its worst performance since the week ended June 17. It has fallen in all but one of the past seven sessions, buffetted both by the Bank of Japan’s surprise hawkish policy tweak on Tuesday and ongoing worries about the U.S. economy.
Sea transport dropped 2.14%, making it the Topix’s worst performing sector.
Transport equipment makers also underperformed, sliding 1.54%. Toyota lost 1.49% and Nissan dropped 2.44%.
Chip-making equipment giants Tokyo Electron and Advantest were the biggest drags, with their respective 3.73% and 3.93% tumbles, following big losses for U.S. chip-related after a glum forecast from Micron Technology Inc.
The biggest percentage decliner was drugmaker Eisai , plunging 5.19%. (Editing by Rashmi Aich)