Nikkei falls on Wall Street drop, yen’s ascent

Stocks fell Tuesday, dragged down by extended losses on Wall Street overnight and a rise in the yen.

The Nikkei 225 average plunged 110.02 points, or 0.64 percent, to close at 17,087.71. On Friday, the key market gauge climbed 30.63 points.

The Topix ended down 5.89 points, or 0.43 percent, at 1,374.69 after rising 2.91 points Friday.

The TSE was closed Monday for Coming-of-Age Day.

Stocks met with heavy selling from the outset of Tuesday’s trading after U.S. equities lost ground for the second consecutive session Monday, as a further drop in crude oil prices dampened investor sentiment.

On the New York Mercantile Exchange, the key crude oil futures contract ended at $ 46.07 per barrel, the lowest level in about five years and nine months.

With crude oil prices showing no signs of reaching bottom, investor concerns have grown larger about earnings of oil developers and other firms investing in oil producer countries, an online securities firm official said.

Stock selling was also fueled by the yen’s rise against the dollar on safe-haven buying.

The Nikkei average gave up 350 points to slip through 17,000 at one point in the morning, after the dollar fell below ¥118 for the first time in about one month in Tokyo.

In the afternoon, however, stocks cut the losses, helping the Nikkei retake 17,000 toward the close.

“In late trading, moves emerged to prevent the Nikkei from falling back below 16,800, the level seen before the Bank of Japan implemented additional monetary stimulus measures at the end of October,” said Hiroaki Hiwada, senior strategist in the investment research division at Toyo Securities Co.

Although stocks have been unstable since the turn of the year, a majority of players are still optimistic about the future course of the market, brokers said.

The market is likely to be continuously underpinned by the Government Pension Investment Fund’s stock buying as well as the BOJ’s purchases of exchange-traded funds, a bank-affiliated securities firm official said.

Hiwada, however, pointed out that fresh buying incentives are needed for stocks to resume their rallies.

Falling issues outnumbered rising ones 1,222 to 542 in the first section, while 96 issues were unchanged.

Volume fell to 2.2 billion shares from Friday’s 2.5 billion shares.

In the oil sector, resources developers Inpex and Japex suffered sharp drops and so did distributors JX Holdings, Showa Shell Sekiyu and Idemitsu Kosan.

Other major losers included retailers Aeon and Seven & I Holdings. The two firms reported sluggish September-November earnings on Friday.

Export-oriented names were downbeat, among them automaker Toyota, chipmaking equipment manufacturer Tokyo Electron and electronics makers Sony and Toshiba.

Clothing chain operator Fast Retailing, a heavily weighted component of the Nikkei average, was also on the minus side.

By contrast, airlines JAL, ANA and Skymark were buoyant.

Restaurant chain operator Yoshinoya Holdings rose on brisk earnings in March-November last year.

In index futures trading on the Osaka Exchange, the key March contract on the Nikkei average fell 120 points to close at 17,090.

Nikkei Futures

nikkeifutures.org@imediaone.com

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