Japanese stocks resumed their decline, with the Nikkei 225 Stock Average poised to enter a bear market, as investor concerns over the global economic outlook outweighed technical signs that a China-fueled rout has gone too far.
The Nikkei 225 fell 2.2 percent to 16,681.33 at the trading break in Tokyo, taking its loss since a high on June 24 to 20 percent. The Topix index slipped 2 percent to 1,362.11, to be within one percentage point of a bear market. Concern over China’s ability to manage a transition to more sustainable growth has driven down global equities in 2016. The International Monetary Fund cut its world expansion outlook.
Oil explorers led declines among the 33 Topix industry groups, with Inpex Corp. sinking 4.1 percent, heading for its lowest close since 2010. Sony Corp. lost 6.3 percent to lead declines on the Nikkei 225. Delivery company Nippon Express Co. added 1.1 percent after the Nikkei newspaper reported its operating profit will rise about 12 percent on lower fuel costs.
It’s official. After the worst ever start to the year for European stocks, they have now entered bear market territory.
It’s been a wild ride in the last nine months for the Stoxx Europe 600 Index, which closed today more than 20 percent from its record high in April — meeting the common definition of a bear market. A weak euro and optimism surrounding the European Central Bank’s stimulus plan proved no match for disappointing news out of China that added to worries about global growth. Global stocks plunged today on renewed concerns.
A big chunk of the declines came just this year. Stocks fell about 10 percent in 2016 alone, with volatility spiking to a September high. The Stoxx 600 closed at a one-year low of 329.84. Only 17 of the index’s 600 shares are trading above their December 31 price, and earnings, once seen as a potential bright spot, are now unlikely to offer much support. Earnings revisions across the world are now the most negative since 2009.
After the Stoxx 600’s high in April, concerns about Greece’s economy, China’s currency policy and Volkswagen AG’s emissions scandal had battered markets by the end of September. A two-month rally followed, until a disappointing stimulus package from the ECB in December cut those gains short.