Stocks plunged again yesterday in Tokyo as a strong yen hammered exporters on the back of deepening fears about the global economy, marking a grim end to a tumultuous week on Japanese markets.
The benchmark Nikkei 225 dropped 4.84 percent, or 760.78 points, to close at 14,952.61, shedding more than 11 percent in a holiday-shortened week.
The broader TOPIX of all first-section shares plunged 5.43 percent, or 68.68 points, to 1,196.28. It lost more than 12 percent since Monday.
Photo: EPA
Before a one-day public holiday on Thursday, the Nikkei closed at its lowest level since October 2014, when the Bank of Japan unleashed a second wave of monetary stimulus that sparked a big stock market rally.
“We’ve entered a different phase in the market,” Nomura Holdings senior strategist Juichi Wako told Bloomberg News. “We’re not simply in a risk-off mode, the market’s fallen to the point of pricing in a recession in the US. The market is saying we’re worried no matter what [US Federal Reserve Chair Janet] Yellen says and their reaction shows there can be no real relief until we can truly see what’s happening in the US economy.”
A fierce sell-off gripped world markets on Thursday after Yellen warned on global growth.
The Fed boss said market turmoil and tighter financial conditions posed risks to the US economy and she pointed to “uncertainty” on China’s yuan policy as a key cause of that turmoil.
Her less-than-optimistic assessment sparked more yen buying as traders flocked to a currency seen as a safe haven in times of turmoil.
A stronger yen is bad for Japanese shares, though, as it hurts the profitability of the nation’s exporters.
In currency trading, the US dollar slipped to ￥112.17 from ￥112.39 in New York, where it tumbled below ￥111 at one stage. The US dollar was above ￥114 before the public holiday.
The wild volatility has prompted Japanese officials to say they would take “appropriate measures,” sparking speculation that the central bank could intervene in currency markets for the first time since 2011 to stop the yen’s rise.
Bank of Japan (BOJ) Governor Haruhiko Kuroda met with Japanese Prime Minister Shinzo Abe yesterday to discuss the volatility in financial markets.
“The verbal intervention has already started, with MOF [Ministry of Finance] officials talking about moves being rough, which looks like the new code word for undesired strength,” National Australia Bank co-head of currency strategy Ray Attrill said. “One-hundred-and-ten yen might be some line in the sand when the MOF will lean on the BOJ to shore things up.”
In Tokyo trading, Toyota tumbled 6.8 percent to close at ￥5,710, rival Nissan fell 5.81 percent to ￥928, Subaru maker Fuji Heavy Industries plummeted 9.03 percent to ￥3,472 and Honda was down 5.5 percent to ￥2,736.5.
Mobile carrier SoftBank sank 9.53 percent to ￥4,164 and Sony was down 3.58 percent at ￥2,257.
Financials also took a hit with major brokerage Nomura diving 9.2 percent to ￥446.6, while banking giant Mitsubishi UFJ slipped 2.23 percent to ￥446.2.
Energy explorer Inpex declined 6.36 percent to ￥878.7. JX Holdings fell 4.28 percent to ￥424.2.
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