Nikkei touches 3-week low after Wall St tumble, then pares losses

  • Reuters
  • Stock Market News
Nikkei touches 3-week low after Wall St tumble, then pares losses
Credit: © Reuters.

* Trading houses, steelmakers, mining shares underperform

* Nissan rises as cheap valuations attract retail investors

* Shares of Takashimaya plunge on convertible bond plan

By Ayai Tomisawa

TOKYO, Nov 21 (Reuters) - Japan's Nikkei touched a more than a three-week low on Wednesday morning after Wall Street's tumble hit sentiment, while falling oil prices dragged down resource and trading-house shares.

The Nikkei share average .N225 fell as far as 21,243.38, the lowest level since Oct. 30, before it pared losses to be off 0.6 percent at 21,447.53 at the midday break.

The Topix .TOPX dropped to 1,598.54, then reduced losses to be 1,609.94, down 1 percent for the day.

That index is not far from bear market territory - defined as peak-to-trough losses of more than 20 percent. When the Topix fell to 1,581.56 on Oct 26, it was 17 percent below its 2018 peak of 1,911.31 in late January.

"Major factors dragging down Japanese stocks are a sell-off in U.S. shares and concerns about weaker forecasts in Japanese corporate earnings due to worries about weak global growth," said Hikaru Sato, a senior technical analyst at Daiwa Securities.

Underscoring investors' risk-averse sentiment, global cyclical resource shares such as trading houses, steelmakers and mining shares underperformed.

Marubeni Corp 8002.T shed 2.8 percent, Mitsubishi Corp 8058.T tumbled 3.0 percent, Nippon Steel and Sumitomo Metal 5401.T declined 2.2 percent, JFE Holdings 5411.T dropped 2.1 percent and Inpex Corp 1605.T stumbled 4.1 percent.

Oil prices tumbled more than 6 percent on Tuesday in heavy trading volume, caught in a broader Wall Street sell-off fed by mounting concerns about a slowdown in global economic growth. Motor Co 7201.T rebounded 1.1 percent from a Tuesday's drop following the arrest on Monday night of chairman Carlos Ghosn, which created shockwaves.

Traders said that an immediate impact on Nissan's bottom line is unlikely.

Nissan has cheap valuations, with its price-to-earnings ratio around 7.52 and shares trading below book value. Its dividend yield is at 5.92 percent, compared to the Nikkei's yield at 1.98 percent.

"Nissan is one of the popular stocks with high dividend yields, and when the overall market is weak, retail investors tend to buy high dividend stocks," said Yoshihiro Okumura, general manager at Chibagin Asset Management.

Department store operator Takashimaya Co 8233.T nosedived 16 percent to be the biggest loser on the main board Wednesday morning after it said it will issue convertible bonds. (Editing by Richard Borsuk)

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