The Japanese stock market experienced a substantial drop on Monday, erasing gains from the past two sessions. The benchmark Nikkei 225 Index plummeted more than 4%, falling below the 38,200 level, in response to mixed signals from Wall Street on Friday. Losses were led by major sectors such as technology and exporters, while financial stocks remained the sole bright spot.
Specifically, the Nikkei 225 Index decreased by 1,639.64 points, or 4.12%, to 38,189.92, after touching a low of 37,960.09 earlier in the session. This follows a significant uptrend in Japanese shares observed on Friday.
Heavyweights such as SoftBank Group and Fast Retailing (Uniqlo's operator) saw declines of over 6% and more than 2%, respectively. Among automakers, Honda fell by over 6%, and Toyota by nearly 7%. In the technology sector, Screen Holdings, Advantest, and Tokyo Electron each saw losses exceeding 5%.
Conversely, the banking sector displayed positive performance: Sumitomo Mitsui Financial gained more than 4%, Mitsubishi UFJ Financial added over 2%, and Mizuho Financial surged over 5%.
Major exporters faced downturns with Canon slipping nearly 6%, Mitsubishi Electric over 5%, Panasonic more than 3%, and Sony down more than 3%.
Other notable decliners included Isetan Mitsukoshi, plummeting by 11.5%, and Lasertec, dropping by over 9%. Companies like J. Front Retailing, Sumitomo Realty & Development, and Mitsui Fudosan each fell nearly 9%, along with Taiyo Yuden and Mitsubishi Estate, which each declined by over 8%. Tokyo Electric Power, Tokyo Tatemono, Subaru, TDK, Suzuki Motor, and Nomura Holdings all saw drops of over 7%, with Mazda Motor and Nitto Denko each losing almost 7%.
On the upside, Resona Holdings surged nearly 6%, Concordia Financial Group gained more than 3%, and Chiba Bank, DeNA, and Shizuoka Financial each added nearly 3%.
In economic developments, Japan's Industrial Production fell by a seasonally adjusted 3.3% in August, according to the Ministry of Economy, Trade and Industry (METI), missing expectations for a 0.5% decrease. This follows a 3.1% increase in July. Annually, output declined by 4.9%. METI forecasts a 2.0% rise in September and a 6.1% increase in October.
Retail sales in Japan, however, rose by a seasonally adjusted 0.8% in August, totaling 13.772 trillion yen. This is an improvement from the 0.2% increase in July and 0.6% in June. Year-over-year, retail sales grew 2.8%, surpassing the predicted 2.6% and up from 2.7% the previous month.
On the currency front, the U.S. dollar is trading in the lower 142 yen range as of Monday.
In Wall Street action on Friday, stocks had a mixed performance, with the Dow reaching a new record closing high, while the Nasdaq and the S&P 500 retreated. The Dow concluded the session up 137.89 points or 0.3% at 42,313.00, the Nasdaq fell 70.70 points or 0.4% to 18,119.59, and the S&P 500 edged down 7.20 points or 0.1% to 5,738.17.
European markets showed positive movements; the German DAX Index increased by 1.2%, the French CAC 40 Index climbed by 0.6%, and the U.K.'s FTSE 100 Index rose by 0.4%.
Lastly, crude oil prices advanced on Friday as China’s government implemented additional stimulus measures, alleviating concerns about demand. West Texas Intermediate Crude oil futures for November rose by $0.51, settling at $68.18 a barrel.