Roundup: Tokyo stocks close lower on U.S. inflation, recession concerns

TOKYO, July 12 (Xinhua) -- Tokyo stocks fell Tuesday snapping a three-day winning streak as investors opted for profits amid concerns over the future health of the U.S. economy and rising cases of COVID-19.

The 225-issue Nikkei Stock Average dropped 475.64 points, or 1.77 percent, from Monday to close the day at 26,336.66.

The broader Topix index, meanwhile, lost 31.36 points, or 1.64 percent, to finish at 1,883.30.

On the top-tier Prime Market, every industry category declined except for farm and fishery issues. Major decliners were led by machinery, glass and ceramics product, and electric appliance issues.

Local dealers said that Wednesday's U.S. consumer price index for June could come in ahead of market expectations, which would largely trigger the U.S. Federal Reserve to continue with its aggressive monetary tightening to deal with inflation.

They added, however, that the Fed's moves, if they were to continue in the same vein, could in fact tip the world's largest economy into recession.

"There are concerns if the U.S. economy will be able to withstand if the Fed raises interest rates significantly at its policy meeting later this month," Masahiro Ichikawa, chief market strategist at Sumitomo Mitsui DS Asset Management Co., was quoted as saying.

"Investors are worried that the interest rate hike may lead to a recession rather than an economic slowdown," Ichikawa said.

With a number of countries experiencing a resurgence in coronavirus cases, including Japan, which is currently dealing with a seventh wave of infections, stocks could be set to weaken, a market participant said.

"The increased spread of COVID-19 has strengthened fears of a global recession," a market participant at a domestic securities firm, was quoted as saying.

"Given this situation, Japanese stocks, which are largely economically sensitive, are inevitably going to weaken," the participant said.

Japan reported 54,993 COVID-19 cases on Monday, surging from 16,791 infections a week earlier, official government data showed.

By the close of play, machinery, glass and ceramics product, and electric appliance issues comprised those that declined the most, and issues that fell outpaced those that rose by 1,654 to 161 on the Prime Market, while 23 ended the day unchanged.

Technology shares lost ground with Nikkei heavyweight Softbank Group dropping 4.3 percent, while fellow heavyweight Yaskawa Electric lost 4.1 percent.

Uniqlo's operator, Fast Retailing, also weighed on the broader market, ending the day 0.7 percent lower.

Video game makers found favor, bucking the downward trend, however, with Nintendo advancing 0.4 percent, while Konami Group finished 0.7 percent higher.

On the Prime Market on Tuesday, 1,061.10 million shares changed hands, dropping from Monday's volume of 1,152.48 million shares.

The turnover on the second trading day of the week came to 2,459.32 billion yen (17.92 billion U.S. dollars).