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Financials

Japan stocks hit 1-1/2-week low as U.S. tech rout turns contagious

TOKYO, Sept 9 (Reuters) - Japanese shares on Wednesday dropped to their lowest in more than a week as global risk sentiment soured after an extended selloff in U.S. heavyweight technology companies.

The benchmark Nikkei share average closed 1.04% lower at 23,032.54, while the broader Topix lost 0.96% to 1,605.40.

Both indexes hit their lowest level since Aug. 28.

Optimism that the Bank of Japan would buy exchange-traded funds to support the market in addition to a higher e-mini futures for the S&P 500 helped curb early declines.

Wall Street closed lower overnight as technology stocks extended declines, sending the Nasdaq into correction territory. The tech-and-stimulus-led rally halted last week with the Nasdaq falling as much as 9.9% from its record closing high as investors booked profits after a run that boosted the index about 70% from its pandemic-lows.

Tokyo-listed technology stocks followed suit, but deputy head of investment management at Aberdeen Standard Investments Hisashi Arakawa said the scale of decline was relatively smaller as Japan’s tech valuations were not as overheated as the United States.

“I think when the market calms down at some point in time, stocks that have been growing will resume their growth,” Arakawa said.

Shares of SoftBank Group Corp dropped 2.87% to post their fifth consecutive session of losses.

The conglomerate’s stock has been falling since sources told Reuters and other media late last week that it had built up massive stakes in U.S. tech firms, in addition to purchasing call options.

Other technology companies including Sony Corp and Tokyo Electron dropped around 2% each.

Hopes of a quick economic recovery were dampened after AstraZeneca Plc said it has paused a late-stage study of one of the leading coronavirus vaccine candidates over safety concern.

Energy-related stocks tumbled as oil prices slumped after Saudi Arabia cut its October selling prices and COVID-19 cases rebounded in several countries.

Mining led decliners on the main bourse, down 2.55%, while the oil and coal products sector fell 0.72%.

Shares of oil and gas exploration company INPEX Corp dropped 3.06% and Cosmo Energy Holdings Co fell 1.12%. (Reporting by Eimi Yamamitsu; Editing by Amy Caren Daniel and Sherry Jacob-Phillips)

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