Japanese Market Sharply Lower

The Japanese stock market is sharply lower on Tuesday, extending the losses in the previous two sessions, with the benchmark Nikkei index staying just above the 27,000 mark, despite the positive cues from Wall Street overnight, as traders are selling off stocks amid fears of inflation and policy tightening by the US Federal Reserve.

Concerns over the continued spike in domestic Covid-19 cases also dented market sentiment, with Japan topping 50,000 daily new cases and hitting record highs each day last week. A majority of the 47 prefectures hit record highs, with 17 prefectures under quasi-state of emergency from Friday for three weeks and 17 more expected to follow soon.

The benchmark Nikkei 225 Index is losing 538.24 points or 1.95 percent to 27,050.13, after hitting a low of 27,015.79 earlier. Japanese shares closed modestly lower on Monday.

Market heavyweight SoftBank Group is losing more than 3 percent and Uniqlo operator Fast Retailing is edging down 0.5 percent. Among automakers, Honda is edging down 0.5 percent and Toyota is losing almost 2 percent.

In the tech space, Advantest is losing almost 3 percent, while Tokyo Electron and Screen Holdings are down more than 2 percent each. In the banking sector, Mitsubishi UFJ Financial is declining almost 2 percent, Sumitomo Mitsui Financial is down more than 1 percent and Mizuho Financial is losing more than 2 percent.

The major exporters are mostly lower. Panasonic, Mitsubishi Electric and Sony are declining more than 2 percent each, while Canon is gaining 1.5 percent.

Among the other major losers, Rakuten Group is plunging more than 6 percent, while Recruit Holdings and GS Yuasa are losing almost 6 percent each. Kawasaki Kisen Kaisha is down almost 5 percent, while Nippon Yusen K.K., CyberAgent and Japan Steel Works are declining more than 4 percent each. Minebea Mitsumi, Komatsu, Fuji Electric, NTT Data and Mitsui O.S.K. Lines are slipping almost 4 percent each.

Conversely, there were no major gainers.

In the currency market, the U.S. dollar is trading in the higher 113 yen-range on Tuesday.

On Wall Street, stocks showed a substantial turnaround over the course of the trading session on Monday, recovering strongly after another sell-off. The major averages all bounced well off their lows of the session and into positive territory.

The Dow was down more than 1,000 points at its worst levels but ended the day up by 99.13 points or 0.3 percent at 34,364.50. The blue chip index rebounded after hitting its lowest intraday level in over nine months.

The Nasdaq and the S&P 500 also showed significant rebounds after hitting multi-month lows. After plunging by as much as 4.9 percent, the Nasdaq climbed 86.21 points or 0.6 percent to 13,855.13, while the S&P 500 rose 12.19 points or 0.3 percent to 4,410.13 after dipping into correction territory.

Meanwhile, the major European markets all showed substantial moves to the downside on the day. While the U.K.'s FTSE 100 Index tumbled 2.6 percent, the French CAC 40 Index and the German DAX Index plunged 3.8 percent and 4 percent, respectively.

Crude oil prices plunged sharply Monday amid rising fears the Federal Reserve might resort to aggressive monetary tightening. A firm dollar also weighed on oil prices on rising tensions between Russia and the West over Ukraine. West Texas Intermediate Crude oil futures for March dropped $1.83 or 2.2 percent at $83.31 a barrel.

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