Tokyo stocks tumble on global economic concerns, Nikkei drops more than 3 percent

Tokyo, March 25 (Xinhua) -- Tokyo stocks closed sharply lower Monday, tracking losses on Wall Street late last week, as downbeat U.S. and European economic data sparked fresh concerns about the outlook for the global economy.

The 225-issue Nikkei Stock Average dropped 650.23 points, or 3.01 percent, from Friday to close the day at 20,977.11, marking its lowest closing level since Feb. 15.

The broader Topix index of all First Section issues on the Tokyo Stock Exchange, meanwhile, fell 39.70 points, or 2.45 percent, to finish at 1,577.41.

Market strategists here said that Tokyo stocks came under pressure from the get-go, as disappointing manufacturing output data from Germany rekindled concerns about the health of the eurozone, while data release recently measuring manufacturing and services activities in the United States also failed to meet median market expectations.

"Investors turned risk-off following a series of economic data. Concerns about the global economic recession are emerging," Akira Tanoue, a senior strategist in the investment research department at Nomura Securities Co. was quoted as saying.

As U.S. and European equities lost ground late last week, those losses were passed on to Tokyo issues, local brokers said, with the benchmark Nikkei stock index posting its largest point loss since Dec. and lowest close, below the 21,000 threshold, since mid-February, market players here highlighted.

Fears of a global economic recession, while deemed an overreaction by some traders, saw investors offloading issues, investment analysts said, with concerns that the U.S. Federal Reserve opting recently to continue its halt on interest rate hike this year seen by some as an indicator of a possible slowdown in growth in the U.S. and the broader global economy.

Masayuki Kubota, chief strategist at Rakuten Securities, was quoted as saying the U.S. Federal Reserve's dovish 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 a worsening of the global economy," Kubota said, adding, "It is possible that the Nikkei will fall near 20,000 if the yen rises further."

The dollar changed hands at 109.94 yen in afternoon trade here, compared with 109.93 yen in New York on Friday.

As such, automakers skidded down, with Toyota reversing 2.1 percent and Honda dropping 2.9 percent by the close.

Other firms broadly exposed to the global economy lost ground, with industrial robotics maker Fanuc losing 3.8 percent, while Keyence closed down 1.2 percent. Komatsu, meanwhile, ended the day 4.1 percent lower.

With the U.S yield curve briefly inverting on Friday, a known harbinger of a possible global recession, insurers and financial issues came under pressure, with Mitsubishi UFJ Financial losing 2.9 percent and Sumitomo Mitsui Financial dropping 2.4 percent.

"Insurers reacted negatively as it becomes harder for them to manage assets," Eiji Kinouchi, chief technical analyst at Daiwa Securities said, highlighting the fact that Japanese banks and insurers seek high yielding products like U.S. bonds, hence the inversion of the U.S. yield curve weighing heavily Monday.

Pharmaceutical issues, in addition, lost ground following Eisai Co. saying last week that an experimental Alzheimer's drug trial held along with its partner Biogen Inc. had been scrapped.

Eisai tumbled 19.8 percent, Takeda Pharmaceutical fell 2.5 percent and Astellas Pharmaceutical closed the day 3.8 percent lower.

By the close of play, all industry categories on the main section retreated into negative territory, with oil and coal product, nonferrous metal and machinery-linked issues comprising those that declined the most.

Issues that fell hammered those that rose by 2,014 to 104 on the First Section, with 22 ending the day unchanged.

On the main section on Monday, 1,327.84 million shares changed hands, dropping from Friday's volume of 1,365.59 million shares.

The turnover on the first trading day of the week came to 2,391.7 billion yen (21.70 billion U.S. dollars).