TOKYO, Nov 30 (Reuters) - Japanese shares dropped for the
third straight session on Tuesday after Moderna's chief
executive officer told the Financial Times that existing
COVID-19 vaccines would likely be much less effective at
tackling Omicron than earlier variants.
The Nikkei average lost 1.63% to 27,821.76, hitting
its lowest level since Oct. 7 and erasing earlier gains fuelled
by hopes that Omicron's impact might not be as severe as feared.
It has lost 5.7% in the past three sessions.
The broader Topix lost 1.03% to a three-month low of
1,928.35, slipping further below its closely-watched 200-day
Both indexes erased their hefty, earlier gains after the
Financial Times reported that the head of drugmaker Moderna
said COVID-19 vaccines were unlikely to be as effective
against the Omicron as they had been previously.
Vaccine resistance could lead to more sickness and
hospitalisations and prolong the pandemic.
Some fund managers also pointed out the market is vulnerable
because inflation fears are prompting central banks around the
world to wind down their stimulus.
"The report about the vaccine was just a trigger and it is a
superficial reason. The real problem is the withdrawal of excess
liquidity. The party is over," said Yasuo Sakuma, chief
investment officer at Libra Investments.
Car makers were among the worst hit despite signs their chip
shortage woes are easing, as the yen strengthened on safe-haven
Nissan Motor lost 5.2% while Mitsubishi Motors
dropped 4.4% and Toyota fell 0.6%.
Cyclials such as steelmakers also suffered, with the Topix
steelmaker index losing 2.4% to be the worst
performing sector, followed by a 1.9% fall in shippers
The market was also saddled by net selling, estimated to be
around 200 billion yen, from passive accounts that track MSCI as
15 Japanese stocks will be eliminated from the index while only
two will be added.
Meanwhile, some battered travel-related stocks were
resilient. The TSE Land Transport Index, mainly made
up of train operators, rose 0.5%, with Keio up 2.4% and
East Japan Railway adding 1.9%.
(Reporting by Hideyuki Sano; Editing by Sherry Jacob-Phillips
and Subhranshu Sahu)