The 225-issue Nikkei Stock Average index stumbled 385.89 points, or 1.44%, to finish at 26,405.23. The broader Topix index of all First Section issues on the Tokyo Stock Exchange declined 19.31 points, or 1%, to 1,915.62.
Total 31 of 33 TSE sectors declined along with Topix index. Transportation Equipment was worst performing sector, falling 2.4%, followed by insurance (down 2%), mining (down 1.8%), banks (down 1.6%), and machinery (down 1.4%) sectors.
Market concerns over a potential recession in the United States were reinforced after data released on Wednesday showed US consumers losing steam and business investment falling. Producer prices slid by the most since the start of the pandemic and retail sales fell by the most in a year.
Comments from Fed officials Wednesday repeated calls for more hikes even after further signs the economy was softening and inflation cooling. St. Louis Fed President James Bullard said policy was not yet in restrictive territory and projected a forecast rate of up to 5.5% by the end of the year in the Fed's dot plot projections.
Shares of automaker and export-oriented tech company issues declined as the firming yen. Nissan Motor slid 3.6% to 419.6 yen while Mazda Motor lost 5.1% to 949 yen.
Banking and other financial stocks also lost ground as the BOJ's announcement dashed hopes of the central bank lifting its cap on long-term bond yields again any time soon, a move that would have supported their earnings. Sumitomo Mitsui Financial Group fell 1.8% to 5,409 yen.
Department store operator J. Front Retailing jumped 3% as data showed the number of inbound tourists to Japan increased in 2022 for the first time in three years.
ECONOMIC NEWS: Japan's trade deficit narrowed to a five-month low in December but the whole year shortfall was the biggest on record, official data revealed Thursday. Exports increased 11.5% on a yearly basis in December, slower than the 20.0% rise in November, the Ministry of Finance reported. The annual growth was forecast to slow more markedly to 10.1%. Similarly, growth in imports eased to 20.6% from 30.3% in the previous month. The trade deficit narrowed more-than-expected to a five-month low of JPY 1.45 trillion from JPY 2.03 trillion in December.
CURRENCY NEWS: The yen stood at 128.60 against US dollar, appreciated 0.23% from previous day close of 128.88, after trading in the range between 127.76-128.96.
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