• Markets

Nikkei suffers 1st annual fall in 4 yrs

The Yomiuri Shimbun
Scriptwriter Koki Mitani rings a bell at the year-end ceremony of the Tokyo Stock Exchange on Friday as Prime Minister Fumio Kishida applauds

TOKYO (Jiji Press) — The Nikkei stock average edged higher in the 2022 final session Friday, but the benchmark index logged annual net loss for the first time in four years.

The Nikkei average of 225 selected issues listed on the Tokyo Stock Exchange’s Prime section inched up 0.83 point to finish at 26,094.50, after losing 246.83 points Thursday.

Meanwhile, the broader TOPIX index ended down 3.56 points, or 0.19%, at 1,891.71, following a 13.75-point drop the previous day.

For the whole of 2022, the Nikkei lost 2,697.21 points, or 9.37%, and the TOPIX shed 100.62 points, or 5.05%.

In 2022, the Nikkei average scaled to a closing high of 29,332.16 on Jan. 5, but it then headed south, hitting bottom at 24,717.53 on March 9.

The start of Russia’s invasion of Ukraine in late February escalated concerns over inflation and the adverse effects of interest rate hikes by the U.S. Federal Reserve and other major central banks on the global economy.

The market remained sensitive to inflation figures and speculations about decisions on interest rates, notably by the Fed, for the rest of the year. However, its downside has been basically solid, partly thanks to the yen’s weakening against the dollar. One exception was a sell-off in late December brought on by the Bank of Japan’s totally unexpected move to allow the 10-year Japanese government bond yield to fluctuate in a wider range, which investors took as an effective interest rate hike.

On Friday, the market opened higher following all three major U.S. market indexes’ rallies Thursday on a halt in U.S. long-term interest rates’ ascent. But buying lost steam amid a lack of supportive events. U.S. index futures’ weakness in premarket trading as well dampened sentiment.

Yutaka Miura, senior technical analyst at Mizuho Securities Co., also pointed out that the market’s topside was “capped by the yen’s strengthening against the dollar.”

“Trading was lackluster with institutional investors absent on the year-end and New Year holidays,” said Masahiro Ichikawa, chief market strategist at Sumitomo Mitsui DS Asset Management Co.

On the Prime section, gainers marginally outnumbered decliners 895 to 843 while 100 issues were unchanged. Volume decreased to 881 million shares from Thursday’s 1,021 million shares.

Shipping firms, such as Kawasaki Kisen, attracted robust purchases.

On the other hand, lower crude oil prices pulled down resources developers and oil wholesalers. Food makers were also downbeat.

In index futures trading on the Osaka Exchange, the key March contract on the Nikkei average rose 10 points to 25,990.

Market sources forecast that stocks are unlikely to turn buoyant in the first week of 2023.

“A focal point in the three-day week is whether the Nikkei can consolidate at around 26,000,” Ichikawa said.

Miura noted that the market is likely to be volatile after the year-end and New Year holidays, with investors being sensitive to U.S. economic indicators, including the Institute for Supply Management’s manufacturing and nonmanufacturing purchasing managers’ indexes for December, due out Wednesday and Jan. 6, respectively, and the Labor Department’s employment report for the same month, to be released on Jan. 6.

The Nikkei is expected to move mainly between 25,800 and 26,500, Miura said.