Japan Nikkei falls on negative offshore lead

Headline indices of the Japan share market declined on Friday, 05 October 2018,as risk aversion selloff triggered on following negative lead from Wall Street overnight where stocks sank on worries about the spike in long-term U.S. Treasury yields. Among TSE33 issues, 21 issues declined, while 12 issues inclined, with shares of Nonferrous Metals, Chemicals, Electric Appliances, Mining, Metal Products, and Marine Transportationissues being notable losers, while Securities & Commodities Futures, Banks, Insurance, and Electric Power & Gasissues were notable gainers. Around late afternoon trade, the 225-issue Nikkei index was down 111.65 points, or 0.5%, at 23,863.97. The broader Topix index of all First Section issues on the Tokyo Stock Exchange fell 2.40 points, or 0.13%, to 1,798.80.

The S&P 500 and the Nasdaq on Thursday booked their worst sessions in about three months as a powerful climb in government bond yields rippled through Wall Street, forcing a broad reassessment of assets perceived as risky, like stocks. The yield on the 10-year U.S. Treasury note was up 3.8 basis points at 3.196% and earlier topped 3.23% to trade at its highest since 2011. This comes a day after its largest one-day rise since March 2017. Investors dumped bonds as economic indicators pointed to continued strength in the economy. A higher yield can dampen enthusiasm for stocks, as it offers higher returns for income-seeking investors, without the risk or volatility typically associated with equities.

 

Investors will keep a close eye on Friday's monthly U.S. payrolls report after the sell-off in bonds that's been in part triggered by data underscoring the strength of the American economy. Federal Reserve Chairman Jerome Powell also stoked the surge in yields this week when he said the central bank could eventually boost its benchmark past the neutral level.

CURRENCY NEWS: Japanese yen appreciated against greenback on Friday, as resumed safe heaven demand. The dollar was quoted at 113.92-93 yen compared with 113.87-97 yen in New York and 114.29-31 yen on Thursday in Tokyo. The euro, meanwhile, fetched 131.22-26 yen against 131.13-23 yen in New York and 131.36-40 yen in late Thursday afternoon trade in Tokyo.

OFFSHORE MARKET NEWS, US stock market closed down on Thursday, as a recent jump by U.S. treasury yields raised concerns about the outlook for interest rates. The Dow Jones Industrial Average tumbled 200.91 points or 0.8% to 26,627.48, the Nasdaq plunged 145.57 points or 1.8% to 7,879.51 and the S&P 500 slumped 23.90 points or 0.8% to 2,901.61.

The major European markets ended down on Thursday. The German DAX Index fell by 0.4%. The U.K.'s FTSE 100 Index and the French CAC 40 Index slumped by 1.2% and 1.5%, respectively.

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