TOKYO: Tokyo stocks opened sharply lower on Monday as fears lingered over a global economic slowdown following a dive in US stocks.
The benchmark Nikkei 225 index dropped 2.13% or 460.36 points to 21,166.98 in early trade, while the broader Topix index fell 2.04% or 32.97 points to 1,584.14.
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 three-month bonds falling below those for 10-year 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.
This happened as “concerns grow over the global economic downturn“, Tsuyoshi Nomaguchi, strategist at Daiwa Securities, said in a commentary.
The Japanese market is also being weighed by weakness in exports to China, he added.
Japanese exports bound for China in the January-February period “have not recovered to the level seen a year earlier,“ and orders for industrial machines remain weak, he said.
Investors are awaiting a series of data this week, including US housing starts for February on Tuesday and Japan’s factory output for February due on Friday, he added.
The dollar fetched 110.06 yen in early Asian trade, against 109.93 yen in New York on Friday.
In Tokyo, blue-chip exporters were lower across the board, with Sony falling 3.29% to 4,554 yen, Panasonic off 2.41% at 935 yen, Honda down 3.04% at 2,961 yen and construction machine maker Komatsu diving 4.80% to 2,537 yen.
On Wall Street, the Dow closed down 1.8% at 25,502.32.
