SYDNEY, June 12 (Reuters) - Japanese stocks skidded to two-week lows on Friday after Wall Street dived on fears that a resurgence of COVID-19 infections could stunt the pace of reopening economies.
The benchmark Nikkei average dropped 1.5% to 22,131.14 by the midday break, after hitting its lowest level since May 29 earlier in the session.
For the week, the Nikkei was down 3.2%, poised for its biggest decline in two months.
U.S. shares plummeted on Thursday as investors reacted to renewed fears of a pandemic resurgence and digested dour economic forecasts from the Federal Reserve, with all three major indexes losing well over 5%.
In the currency market, the safe-haven yen stood firm on renewed pessimism over a quick economic recovery, with the dollar/yen hitting 106.58 overnight, a level unseen in a month.
As a stronger yen hurts Japanese manufacturers’ profits made abroad when repatriated, shares of export-oriented automakers remained under pressure, with Subaru shedding 3.5% and Honda Motor falling 2.5%.
“The ongoing steep correction shows you what type of investors and money is playing in these markets and how fragile the rally was,” said Takeo Kamai, head of executions services at CLSA in Tokyo.
The broader Topix lost 1.8% to 1,560.16 by the recess, after hitting a two-week low earlier, with all the 33 sector sub-indexes on the Tokyo exchange trading lower.
Highly cyclical non-ferrous metals, mining and sea transport were among the worst performing sectors on the main bourse.
Oil and gas exploration companies Inpex and Japan Petroleum Exploration tumbled 3.6% and 4.5%, respectively, as oil prices extended heavy overnight losses.
Nichiigakkan added 0.9% after Hong Kong-based investment fund LIM Advisors said in a letter to management that Bain Capital’s tender offer “substantially” undervalued the Japanese nursing home operator. (Reporting by Tomo Uetake; Editing by Subhranshu Sahu)