Nikkei tumbles on Wall Street drop, yen rise

Stocks fell sharply Thursday following a rise in the yen and an overnight plunge in U.S. equities, with the Nikkei 225 average slipping below 19,500.

The benchmark index tumbled 275.08 points, or 1.39 percent, to close at 19,471.12. On Wednesday, the Nikkei average rose 32.75 points.

The Topix lost 23.19 points, or 1.46 percent, to finish at 1,568.82 after gaining 4.42 points Wednesday.

Stocks met with selling from the outset after Wall Street plunged Wednesday on the back of weaker than expected U.S. economic data, pushing the Dow Jones industrial average down 292.60 points, or 1.62 percent.

The yen’s strengthening also weighed down the TSE, some brokers said.

Stocks extended losses toward the morning close, led downward by index futures. The Nikkei briefly lost nearly 350 points.

A bank-affiliated securities firm official said demand for stocks was sluggish, and it was difficult for institutional investors to make active purchases ahead of the fiscal year-end.

“Active purchases were held in check,” Yoshihiko Tabei, chief analyst at Naito Securities Co., said, explaining that investors had already bought stocks before the final trading day Thursday to secure rights to dividends from companies that close their books this month.

After U.S. durable goods orders in February, announced Wednesday, turned out weak, uncertainty grew over the course of U.S. economy and led to the fall in Tokyo stocks, brokers said.

The downbeat U.S. economic data reduced expectations for an interest rate hike by the Federal Reserve and pushed the yen higher against the dollar, another negative for Tokyo stocks, brokers said.

On the other hand, many brokers believe that there are few minus factors in Japan, pointing to strong hopes for an economic recovery and improvements in corporate earnings.

Tabei said issues with high dividend yields attracted buying although the key market gauges fell back.

Noting that an increasing number of Japanese companies have announced dividend hikes and other shareholder rewards, an official of another major securities firm said market players regard such moves as favorable.

Purchases of shares of such companies will continue to lift the market, brokers said.

Falling issues overwhelmed rising ones 1,558 to 242 in the first section, while 76 issues were unchanged.

Volume grew to 2.299 billion shares from Wednesday’s 2.146 billion.

Automakers Toyota and Honda, electronic device maker TDK and electronic parts maker Murata Manufacturing plunged.

Also on the minus side were airline JAL, Toyo Tire & Rubber and game maker Nintendo.

Other major losers included mobile phone carrier SoftBank and major clothing store chain operator Fast Retailing, both heavily weighted components of the Nikkei average.

By contrast, mobile phone carrier KDDI, beverage maker Asahi Group Holdings and oil developer Inpex gained ground, along with oil distributors JX Holdings, Showa Shell Sekiyu and Idemitsu Kosan.

In index futures trading on the Osaka Exchange, the key June contract on the Nikkei average closed down 360 points at 19,290.

Nikkei Futures

nikkeifutures.org@imediaone.com

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