Japan's Nikkei sinks nearly 6% on US slowdown fears
Updates at 0600 GMT
By Junko Fujita and Ankur Banerjee
TOKYO/SINGAPORE, Aug 2 (Reuters) -Japan's Nikkei share average fell nearly 6% on Friday to post its worst session in more than four years, as fears of a U.S. slowdown and uncertainties over the Japanese central bank's tightening path soured appetite for risk assets.
The Nikkei .N225 closed 5.81% lower at 35,909.7, marking its lowest close since Jan. 26 and biggest one-day percentage fall since March 2020.
The broader Topix .TOPX fell 6.14% to 2,537.6 in its biggest one-day drop since March 2020.
"Momentum in the U.S. market turned negative overnight, with concerns about recession rising. That weighed on Japanese equities a lot today," said Yugo Tsuboi, chief strategist at Daiwa Securities.
U.S. stocks kicked off August sharply lower after a round of economic data spurred concerns the economy may be slowing faster than anticipated while the Federal Reserve maintains a restrictive monetary policy. .N
"In Japan, the market is uncertain about whether the BOJ will raise interest rates again this year and by how much," said Tsuboi, adding that higher rates could strengthen the yen and that could hurt exporters.
The Bank of Japan earlier this week raised its policy rate to 0.25% and Governor Kazuo Ueda did not rule out another hike this year, driving expectations that the rate could rise to 0.5% by the end of this year and 0.75% in April.
The Tokyo Stock Exchange's growth market .TSGM fell 7.25%, and the exchange suspended trading of TSE Growth Market 250 index .MTHR due to a circuit breaker.
Chip-making equipment maker Tokyo Electron 8035.T tanked 12% to drag the Nikkei the most. Chip-testing equipment maker Advantest 6857.T slipped 8%. Technology investor SoftBank Group 9984.T lost 8%.
All the 33 industry sub-indexes on the Tokyo Stock Exchange fell, with financials leading the losses. Brokerage .ISECU.T and banking IBNKS.T slipped 12% and 11%, respectively.
The Nikkei Volatility index .JNIV rose as much as 35% to its highest level since May 2022.
Additonal reporting by Rocky Swift; Editing by Subhranshu Sahu
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