Nikkei down on US economy worries

Nikkei down on US economy worries

Tokyo: The Nikkei share average lost 0.4% on Wednesday as growing concern about the US economy and the dollar’s slip against the yen put Toyota Motor Corp and other exporters under pressure.

Turning selective, investors chased after companies with growth potential such as Sanyo Electric Co Ltd, which extended gains after raising its forecast. Drugmaker Astellas Pharma Inc rose 2.5% to 4,980 yen on its plan to buy US biotech company Agensys Inc.

The market looked ripe for bargain hunting but a cautious outlook on the US economy, Japan’s major export market, kept the market in check, said Norihiro Fujito, general manager for Mitsubishi UFJ Securities Co Ltd’s investment research and information division.

Pessimistic views over the US economy are gaining currency as Goldman Sachs on Tuesday slashed its target for the expected trough in US benchmark interest rates by a full percentage point, citing an increased probability of recession for the US economy.

“Japan cannot rely on domestic demand," Fujito said. “The yen is not likely to help corporate earnings, and costs of raw materials are rising. We cannot expect two-digit growth for Japanese corporate earnings." The Nikkei average fell 61.67 points to 15,161.18 as of 0444 GMT. The broader TOPIX index shed 0.2% to 1,475.49.

Automakers lost ground with Toyota down 1.5% at 6,010 yen and Honda Motor Co Ltd falling 1.9% to 3,590 yen.

Lower oil prices also hit oil and gas developer INPEX Holdings which gave up 4.2% to 1.13 million yen.

Sanyo Electric was up 2.6% to 197 yen after the consumer electronics maker raised its annual operating profit forecast by 11% to 50 billion yen.

Also in the electronics sector, Sony Corp added 3.8% to 5,970 yen, extending its gain into a fourth straight session.

NEC Electronics Corp rose 4.9% to 3,190 yen ahead of its briefing on its business improvement plan.