Japan’s Nikkei share average fell to a one-week low on Thursday as a stronger yen hurt the market sentiment, while bellwether companies such as Panasonic dived after cutting earnings forecasts.
Outperforming the market were oil shares, after a top US Federal Reserve official tempered expectations on the pace of future US interest rate increases, which hammered the dollar and lifted oil prices.
The Nikkei dropped 1.1 per cent to 16,999.86 points by midmorning, after falling 3.2 per cent on the previous day.
In early trade, the Nikkei slid as low as 16,941.88, the lowest since January 28.
Traders said that investors have moved past the Bank of Japan’s surprise move on Friday to adopt a negative interest rate policy, and are focusing again on worries about the global growth outlook.
The dollar was steady at 117.97 yen after dropping 1.7 per cent overnight, hurting exporters.
Toyota Motor Corp dropped 2.2 per cent and Nissan Motor Co fell 1.8 per cent.
Investors were on edge after several Japanese companies cut their full-year forecasts.
“Manufacturers, which have large exposures to China, will likely suffer for a while,’’ said Masaru Hamasaki, head of market & investment information department at Amundi Japan, adding that investors are expected to look into defensive shares this year.
“Many of the defensive stocks are already at expensive levels, so key is whether the country’s fiscal policy can help domestic-demand sensitive companies further grow,’’ Hamasaki said.
Panasonic Corp dived 8 per cent after it forecast an operating profit of ¥410 billion ($3.42 billion) for the year ending March 31, down from a previous estimate of ¥430 billion. Panasonic depends on China for around 13 per cent of its sales.
Hitachi Ltd, which generates about 22 per cent of its revenue from China, plunged 10 per cent after cutting its full-year operating profit forecast to ¥630 billion from an earlier ¥680 billion estimate.
Recently battered oil shares rose, with Inpex Corp climbing 1.7 per cent and Japan Petroleum Exploration is rising 0.7 per cent.
The broader Topix dropped 0.7 per cent to 1,397.27 and the JPX-Nikkei Index 400 shed 0.6 per cent to 12,608.88.