Nikkei dives on sharp surge by yen

Stocks nose-dived Friday, taking a heavy blow from the yen’s sharp appreciation against other major currencies.

The Nikkei 225 average closed 244.54 points, or 1.43 percent, lower at 16,864.16. On Thursday, the key market gauge rose 312.74 points.

The Topix lost 12.87 points, or 0.93 percent, to end at 1,363.73 after climbing 18.62 points Thursday.

Stocks tumbled right after the opening bell, with investors accelerating selling in view of the dollar’s plunge below ¥116 as well as a continued sell-off on Wall Street overnight due to a crude oil price fallback and sluggish earnings reports released by major U.S. companies.

The yen’s upsurge was triggered by the Swiss National Bank’s surprise move to remove the cap on the Swiss franc’s value against the euro, brokers said.

Stocks expanded their losses until early afternoon on the back of the yen’s further strengthening, forcing the Nikkei average to give up more than 500 points at one point. The market, however, showed resilience later, halving the losses by the closing.

Risk-averse selling spread across the board. But players refrained from stepping up selling in the afternoon on expectations for the Bank of Japan’s purchase of exchange-traded funds, a major domestic securities firm official said.

“The market recouped some of the lost ground only on buybacks,” said Masayuki Otani, chief market analyst at Securities Japan Inc. “It is difficult to make active purchases as long as uncertainties over crude oil prices and the U.S. economy persist.”

Optimistic views on the U.S. economy have retreated to some extent since the releases of weaker than expected macroeconomic data and disappointing corporate earnings figures, brokers said.

A wait-and-see mood was rampant in Tokyo ahead of the European Central Bank’s policy-setting meeting Thursday and the Jan. 25 general election in Greece, they said.

But Nobuyuki Fujimoto, market analyst at SBI Securities Co., said it can’t be ruled out that stocks could take an upturn if the ECB announces fresh monetary easing steps.

Falling issues far outnumbered rising ones 1,615 to 206 in the first section, while 39 issues were unchanged.

Volume increased to 2.712 billion shares from Thursday’s 2.506 billion.

The stronger yen battered export-oriented names, such as automakers Toyota, Mazda and Fuji Heavy, industrial robot maker Fanuc and high-tech firm Kyocera.

Electronics giant Sony shed 4.64 percent on concerns over deterioration in its earnings due to the yen’s rise against the euro.

Banks, such as Mitsubishi UFJ and Mizuho, were also downbeat, following poor earnings reports by Citigroup and Bank of America.

Other major losers included clothing store chain operator Fast Retailing and mobile phone carrier SoftBank.

By contrast, tire maker Bridgestone and Kansai Electric Power were buoyant on selective buying.

In index futures trading on the Osaka Exchange, the key March contract on the Nikkei average lost 360 points to end at 16,800.

Nikkei Futures

nikkeifutures.org@imediaone.com

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