May 14, 2020 / 3:44 AM / 3 months ago

Tokyo shares track Wall St lower as Powell warns of extended weakness

SYDNEY, May 14 (Reuters) - Japanese stocks fell on Thursday, tracking an overnight slide on Wall Street, as sentiment soured after the U.S. Federal Reserve’s chairman warned of an extended period of weak economic growth.

The benchmark Nikkei average dropped 0.6% to 20,138.45 by the midday break, moving away from a two-month high hit earlier this week.

Wall Street’s three major indexes slid for the second day in a row due to worries about a second wave of coronavirus infections and Fed Chair Jerome Powell’s subdued view on the recovery of an economy battered by the coronavirus pandemic.

He vowed to use the central bank’s power as needed, but also suggested that might not be enough to avoid deep economic damage without more fiscal support.

Further fuelling investor worries, a top World Health Organization official said the virus may never go away.

E-Mini futures for the S&P 500, which were last quoted down 0.5% in Asian trade, dealt another blow to Tokyo shares.

The broader Topix fell 0.6% to 1,465.71 by the recess, also off Monday’s two-month high, with all but four of the 33 sector sub-indexes on the Tokyo exchange trading lower.

Highly cyclical sea transport, mining and electric machinery were the three worst-performing sector sub-indexes on the main bourse.

Sony Corp shed 2.9% and was the most heavily traded stock on the main board after saying it expects operating profit to drop at least 30% this financial year to its lowest in four years as the coronavirus outbreak damages demand.

Bucking the overall market’s weakness, Takeda Pharmaceutical Co Ltd jumped 5.5% after the company booked a surprise operating profit and forecast that income would triple this financial year. (Reporting by Tomo Uetake; Editing by Devika Syamnath)

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