Japan’s Nikkei Starts 2024 Lower as Quake, Airline Collision Weigh on Sentiment

Reuters

16:07 JST, January 4, 2024

TOKYO, Jan 4 (Reuters) – Japan’s Nikkei share average fell as much as 2% on the first trading day of 2024, as airline, construction and utilities reacted to Tuesday’s aircraft collision and the powerful earthquake that hit western Japan earlier this week.

Chip-related stocks dragged the Nikkei the most on Thursday, tracking overnight weakness of U.S. technology stocks, while the main impact of the quake and collision was on shares in airline, nuclear power plant operators and construction sectors.

The Nikkei trimmed its losses to end 0.53% lower at 33,288.29.

“The Nikkei was dragged lower by technology stocks as well as the earthquake and the airline accident,” said Masahiro Ichikawa, chief market strategist at Sumitomo Mitsui DS Asset Management.

“But gains in U.S. stock futures prompted investors to buy back shares and concerns about the impact of the quake eased.”

The earthquake that hit western Japan coast on New Year’s Day killed at least 81 people, with rescuers still pressing in their search for survivers.

Utility Hokuriku Electric, whose Shika nuclear power plant is located close to the earthquake epicenter, closed 2.2% lower after falling as much as 8%.

Tokyo Electric Power Holdings pared its 7% losses to end up 2.23%.

Chip-related Advantest and Tokyo Electron slumped 3.79% and 4.95%, respectively.

Construction firms Kajima and Taisei rose around 4%, each.

Japan Airlines (JAL) cut its 2% loss to end 0.77% higher. The stock faced a glut of early sell orders after Tuesday’s accident involving a collision between a JAL and a Coast Guard aircraft at Tokyo’s Haneda airport.

“The accident seems to have been caused by a human error so that the damage will be limited to JAL as well as to the industry,” said Takamasa Ikeda, senior portfolio manager at GCI Asset Management.

The Nikkei’s decline contrasts with a 0.52% gain of the broader Topix index, as investors sought shares with higher dividend payouts following the launch of a revised tax-free investment scheme NISA this year.

Topix’s value share index jumped 1.35%, while the growth share index was down 0.3%.