TOKYO, March 25 — Tokyo's benchmark Nikkei-225 index dived more than 3 per cent in morning trade today, as fears grew over a global economic slowdown.
At about 10am (0100 GMT), the Nikkei was down 3.15 per cent, or 682.18 points, at 20,945.16, after it opened down more than two per cent.
Masayuki Kubota, chief strategist at Rakuten Securities, said the dovish US Federal Reserve decision last week was a relief for stock markets but “it also alarmed investors as it suggested the global economy is worsening.”
“A 2019 global slowdown has not yet fully been factored in. Recently, data after data show worsening of the global economy,” he said.
“It is possible that the Nikkei will fall near 20,000 if the yen rises further,” he added, noting it would provide a good opportunity to buy as the global economy is expected to rebound in 2020.
On Friday, US stocks dropped after the closely watched yield curve flashed a warning sign that a recession could be looming.
The yield curve, which tracks the spread between short- and long-term rates on US Treasury bonds, briefly inverted on Friday, with yields on 10-year bonds falling below those for three-month notes — the first time this had happened since before the global financial crisis in 2007.
The yield curve has inverted prior to all recessions in recent decades.
The Japanese market is also being weighed down by weakness in exports to China, Tsuyoshi Nomaguchi, strategist at Daiwa Securities, said in a commentary.
Investors are awaiting a series of data this week, including US housing starts for February tomorrow and Japan's factory output for February due on Friday, he added.
The US dollar fetched 109.73 yen in late morning Tokyo trade, against 109.93 yen in New York on Friday.
In Tokyo, blue-chip exporters were lower across the board, with Sony falling 2.63 per cent to 4,582 yen, Panasonic off 2.67 per cent at 932.5 yen, Honda down 3.43 per cent at 2,949 yen and construction machine maker Komatsu diving 5.40 per cent to 2,521 yen.
On Wall Street, the Dow closed down 1.8 per cent at 25,502.32. — AFP
