Tokyo’s Nikkei stock index tumbled more than 7 percent Thursday to end a roller-coaster trading session below 14,500 as selling triggered by weak Chinese data outpaced sharp gains made earlier and snapped a four-session winning streak.
The 225-issue average closed down 1,143.28 points, or 7.32 percent, from Wednesday at 14,483.98, marking its steepest point fall since April 17, 2000, after pulling back from its session high near the 16,000 mark, the highest intraday mark since Dec. 12, 2007. The broader Topix index of all first section issues on the Tokyo Stock Exchange was down 87.69 points, or 6.87 percent, at 1,188.34.
All 33 sectors declined, led by consumer finance, real estate and securities issues.
Trading volume on the main section swelled to a record-high 7.65514 billion shares from Wednesday’s 6.38067 billion.
After climbing more than 300 points to 15,942.60 in early trading, the Nikkei plunged over 1,400 points as a worse-than-expected HSBC China Manufacturing Purchasing Managers’ Index and a firmer yen in the afternoon led investors to unload shares amid caution over recent surges.
“Toward the end of the trading, panic selling was seen in massively heavy trading,” said Hirokazu Fujiki, a strategist with Okasan Securities. “We can’t tell whether or not this was a temporary storm of selling before watching reactions from U.S. markets later today.”
“Selling accelerated as Chinese manufacturing data fell to a seven-month low generating a sense of disappointment,” said Tatsunori Kawai, chief strategist at kabu.com Securities Co., adding players grew cautious ahead of the release of the eurozone manufacturing index for May later in the day.
Brokers said almost all technical charts were showing signs of overheating, as the Nikkei has not faced much adjustment as it surged more than 50 percent, or 5,000 points this year aided by generous economic policies advocated under Prime Minister Shinzo Abe and aggressive monetary easing by the Bank of Japan, which sent the dollar higher against the yen.
Selling accelerated when the yen jumped against the dollar in Asia afternoon trade as investors adjusted positions after the recent fast-paced decline in the value of the Japanese currency.
The dollar fell to ¥101.63 in Tokyo afternoon trade from ¥103.31 in New York late Wednesday.
“The market may be entering an adjustment period after a sharp decline in the yen and a surge in Japanese stocks,” said Daisuke Karakama, a market economist at the forex division of Mizuho Corporate Bank.
“No one believed the yen would keep on falling and stocks would keep on rising. It is not surprising if yen-buying momentum revives at any time.”
Later in the day, Chief Cabinet Secretary Yoshihide Suga declined comment on the stock market, only saying that weak Chinese economic indicators might have triggered the Nikkei fall.
“The economy of our country is expected to go along the path of a gradual recovery,” Suga said.
The Dow Jones industrial average sank 0.52 percent to 15,307.17 while the dollar was up Wednesday on Federal Reserve chief Ben Bernanke’s suggestions that the bank could taper off its massive stimulus in the coming months.