Monday, October 25

Japan shares end lower on China worries ahead of new govt formation

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TOKYO — Japanese shares shed early gains to end lower on Monday, as worries over the China Evergrande debt crisis outweighed positive cues from a strong finish on Wall Street, while the nation’s new premier called for a sooner-than-expected election.

The Nikkei share average fell 1.13% to close at 28,444.89, with technology and shipping stocks leading the decline. Earlier in the session, it rose as much as 1.16% after five straight sessions of losses. The broader Topix lost 0.62% to 1,973.92.

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“The market started falling as soon as it hit its highest level for the session. This is a typical move when selling pressure is strong,” said Tomoichiro Kubota, a senior market analyst at Matsui Securities.

“The market is facing a triple pain now, with signs of Chinese economic slowdown and the US budget issues. Also, we cannot expect similar monetary policies from Japan’s new cabinet as we had under the Abenomics.”

The Evergrande debt crisis continued to cast doubt over China’s economic growth, while the fate of the Biden Administration’s flagship spending bills is not clear yet.

In Japan, Fumio Kishida officially took over as its 100th prime minister on Monday, but public broadcaster NHK said he was set to dissolve the body next week and call an election for Oct 31.

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His new cabinet members are due to be announced later in the day but so far, Kishida has failed to impress investors, market participants said.

Chip-making equipment maker Tokyo Electron dragged down the Nikkei the most, with a 3.6% drop. Technology start-up investor SoftBank Group fell 2.52% and robot maker Fanuc lost 4.31%.

Shippers tumbled 7.6%, with Kawasaki Kisen and Nippon Yusen losing 8.42% and 8.07%, respectively.

Department store operators rose after Japan lifted its COVID-19 emergency measures last week, with Isetan Mitsukoshi Holdings climbing 5.04% and J. Front Retailing gaining 5.34%.

Airlines and railways led the gains among the exchange’s 33 industry subindexes, rising 2.39% and 2.19%, respectively. (Reporting by Junko Fujita; Editing by Subhranshu Sahu and Ramakrishnan M.)

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