Tokyo stocks open down after Wall St drop

Tokyo stocks opened in the red on Wednesday, after falls on Wall Street and official data that showed Japan’s economy contracted for the first time in two years.

The benchmark Nikkei 225 index was down 0.36 percent, or 82.92 points, to 22,735.10 in early trade while the broader Topix index was down 0.20 percent, or 3.57 points, at 1,801.58.

The lower opening came despite the yen’s drop against the dollar, which often boosts the Japanese stock market as a weak currency is positive for Japanese exports.

The Tokyo bourse got off to a weak start “amid a tug-of-war between lower US stocks and the yen’s depreciation,” said Okasan Online Securities chief strategist Yoshihiro Ito.

The dollar rose to 110.33 yen, unchanged from New York Monday afternoon but up from below 110 yen earlier in Tokyo.

Buying was also subdued after official data showed Japan’s economy shrank in the three months to March after eight quarters of growth.

Wall Street closed sharply lower on Tuesday as inflation fears returned to the market.

While yields on US Treasury bonds rose, the New York Federal Reserve Bank’s survey of business conditions showed a big jump in the price index.

That reignited investor concern that inflation will accelerate, causing the Fed to be more aggressive about raising interest rates.

Mitsubishi UFJ tumbled 3.31 percent to 712.7 yen after the major bank warned its net profit would fall to an eight-year low in the current business year.

Toyota was up 0.85 percent to 7,578 yen while Sony gained 0.32 percent to 5,288 yen.