TOKYO: Japan’s Nikkei share average sank on Friday as a retreat in crude oil pulled down energy shares, keeping the stock benchmark on course for its worst quarterly performance since mid-2022.

Investors were also cautious amid uncertainty over a potential US shutdown and the ongoing auto workers strike, along with key economic data next week, including the Bank of Japan’s tankan survey and the US monthly payrolls report.

“The risks to the US economy are rising, and uncertainty is building,” Nomura Securities strategist Maki Sawada said.

“It’s very difficult to buy Japanese stock actively in such an environment.”

The Nikkei lost 0.11% to 31,836.24 as of the midday recess, erasing early gains on Wall Street’s overnight rally. Chip-related shares and other tech names outperformed, tracking advances for US peers.

But the drag from oil and other resource stocks overshadowed those gains, while shippers accelerated their slide after going ex-dividend.

The broader Topix fell 0.69% to 2,329.24. An index of value stocks tumbled 1.27%, while a growth stock index was flat.

The Nikkei has lost more than 4% this quarter, heading for its first quarterly decline since last September and its biggest since the previous June.

Japan’s Nikkei dragged lower by chip shares amid rising US yields

Japan’s stock benchmark hit its highest since early 1990 at 3,3772.89 in mid June, and has slid about 5% since the most recent peak in the middle of this month. For the week, the Nikkei is down 1.75%.

Shippers, which pay the highest dividends among Japanese stocks, tumbled 4.5% to be the worst performer by far among the Tokyo Stock Exchange’s 33 industry groups. Oil and coal producers were next with a 3.7% slide.

At the other end, precision machinery makers gained 0.5% to lead gainers. Chip-testing equipment maker Advantest, which counts Nvidia among its customers, surged 3.5% to be the Nikkei’s top performer.

Chip-testing equipment giant Tokyo Electron advanced 2.18%.