The Nikkei average ended below 14,000 for the first time in four weeks Thursday, weighed down by massive selling spurred by a downturn on Wall Street and the yen’s appreciation.
The Nikkei lost a whopping 737.43 points, or 5.15 percent, at 13,589.03, its first finish below 14,000 since May 2.
The Topix fell 44.45 points, or 3.77 percent, to end at 1,134.42.
The market opened with a huge loss after U.S. equities retreated overnight on growing wariness that the U.S. Federal Reserve will scale down its quantitative monetary easing.
Investor sentiment was also hurt by the yen’s strengthening against the dollar and the euro.
The Nikkei briefly dived more than 770 points late in the afternoon, dragged down by arbitrage unwinding and position-adjustment selling by hedge funds before they close books, brokers said.
The accelerated downswing in the afternoon also reflected plunges in some of the Nikkei’s heavily weighted components, such as Fast Retailing, Fanuc and Softbank, brokers said.
Many analysts believe the current biggest investor worry is discussions related to the Fed’s exit strategies from its quantitative easing policy following the recent signs of U.S. economic recovery, they said.
So far, the Nikkei’s 25-day moving average has been seen as downside support, but such a market has come to an end, brokers noted.
“Market participants are exploring the Nikkei’s downside,” said Kenichi Hirano, adviser and market analyst at Tachibana Securities Co.
Ryuta Otsuka, strategist at the investment information department of Toyo Securities Co., said: “I believe the Nikkei’s downside is around 13,500. The market’s drastic ups and downs are seen to continue for three to four weeks.”
Falling issues far exceeded rising ones 1,640 to 62 on the first section, while 14 issues were unchanged.
Volume came to 4.479 billion shares, against Wednesday’s 3.910 billion.
All 33 sector subindexes of the TSE’s first section slumped.
JGBs get a bounce
Japanese government bonds rebound Thursday on the tumble in Tokyo stocks.
The lead June futures contract on 10-year JGBs closed up 0.58 point from Wednesday at 142.16 after briefly rising as high as 142.28.
Volume fell to 32,360 contracts from 42,742.