March 13, 2019 / 3:00 AM / 5 months ago

Nikkei tumbles as weak machinery orders, Brexit worries sap mood

* Insurers sold after U.S. yields tumble

* Machinery, auto stocks underperform

* Shin-Etsu soars after share buyback announcement

By Ayai Tomisawa

TOKYO, March 13 (Reuters) - Japan’s Nikkei fell on Wednesday as weak machinery orders dragged down shares of machinery makers and exporters, while worries about Britain’s exit from the European Union kept investors risk averse.

Financial stocks, which hunt for higher yields, also underperformed as U.S. yields tumbled, pressured by weak inflation data, supporting expectations the U.S. Federal Reserve will hold interest rates steady this year.

The Nikkei share average slid 1.4 percent to 21,199.78 points by the midday break, after surging 1.8 percent the previous day.

Japan’s machinery orders fell in January at the fastest pace in four months due to declining demand in the auto and telecommunications equipment sectors as the U.S.-China trade war dented global demand. The 5.4 percent drop from December was much larger than expected.

Electric machinery and other machinery stocks were battered.

Chip equipment makers Advantest Corp shed 2.2 percent, Tokyo Electron declined 1.9 percent, while TDK Corp plunged 4.2 percent and Hitachi Ltd dropped 2.9 percent.

“A bad machinery figure was somewhat expected,” said Yoshinori Shigemi, global market strategist at JPMorgan Asset Management.

He added that the U.S.-China trade war, which has dragged down Japanese companies’ earnings and demand, will likely to pressure Japanese machinery and cyclical stocks for the time being.

“Due to falling demand in autos and chips, it’s difficult to buy stocks related to these sectors,” Shigemi said.

Automakers were sold, with Toyota Motor Corp and Mazda Motor both falling 1.2 percent, while Subaru Corp dropped 1.7 percent.

Insurers Dai-ichi Life Holdings shed 2.1 percent, T&D Holdings tumbled 4.4 percent and MS&AD Insurance dropped 1.7 percent.

Bucking the fall, Shin-Etsu Chemical rose more than 2 percent after the company said to buy back up to 3.3 percent of its own shares worth 100 billion yen.

The broader Topix skidded 1.2 percent to 1,586.44. (Editing by Kim Coghill)

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