Stocks lost ground again Tuesday, with investor sentiment hurt by the yen’s renewed strength against other major currencies.
The Nikkei 225 average closed down 131.59 points, or 1.08 percent, at 12,003.43. On Monday, the key market gauge plunged 262.89 points.
The Topix sagged 9.23 points, or 0.92 percent, to 991.34, ending below 1,000 for the first time since March 5 and extending its losing streak to a fourth session.
The market came under selling pressure from the outset following the U.S. Institute for Supply Management’s worse than expected manufacturing activity index for March, released Monday, as well as the yen’s strengthening, brokers said.
In early trading, the Nikkei tumbled nearly 330 points to slip below 12,000 for the first time since March 7, dragged down by selling of index futures. It cut some of the loss toward the morning close on the back of the brisk performances of realtors, financials and railways.
But the market was hit by renewed selling in the afternoon as the dollar fell below ¥93 for the first time since early March, brokers said.
Selling increased ahead of the Bank of Japan’s two-day policy-setting meeting that starts Wednesday, they said.
The BOJ is widely expected to discuss further monetary easing at the policy meeting, the first since Haruhiko Kuroda took over as governor on March 20, so that the bank will be able to attain its 2 percent inflation target at an early date.
But Masayuki Otani, chief market analyst at Securities Japan Inc., said that “some investors moved to sell stocks before the closely watched event,” bracing for a possibility that the BOJ may not live up to market expectations.
Stocks are also dragging due to lingering external uncertainties, such as the sluggish U.S. recovery and the political confusion in Italy, an official at a major securities firm said.
Still, the market’s downside was underpinned by buybacks amid receding concerns about its overheating following its recent correction, brokers said.
JGBs turn lower
Japanese government bonds erased early gains to sink into negative territory Tuesday after an auction of new 10-year JGBs.
The lead June futures contract on 10-year JGBs closed down 0.10 point at 145.36 after briefly rising as high as 145.62. Volume rose to 48,116 contracts from Monday’s 35,166.