Stocks fell back sharply Monday, pressured mainly by concerns over a slowdown in the Chinese economy.
The Nikkei 225 closed down 167.35 points, or 1.26 percent, at 13,062.78. On Friday, the key market gauge gained 215.55 points. The Topix lost 9.76 points to end at 1,089.64 after climbing 7.59 points Friday.
The market kicked off the week with hefty gains and the Nikkei briefly rose nearly 200 points in early trading thanks to the yen’s fall against the dollar.
After the initial buying ran its course, however, the key market yardstick gradually erased its gains and ended the morning session modestly lower amid growing concerns over the Chinese economy.
The Nikkei’s losses extended to more than 200 points at point, affected by tumbles on the Chinese mainland and Hong Kong stock markets.
“After the People’s Bank of China, the Chinese central bank, expressed cautiousness about monetary easing, concerns grew over a tighter money situation in the Chinese banking sector, prompting selling of stocks in Japan and most of other markets in Asia,” said Hiroichi Nishi, equity general manager at SMBC Nikko Securities.
In addition, Kenichi Hirano, adviser and market analyst at Tachibana Securities Co., said the Nikkei was weighed down by selling in disappointment after the index’s early gains were smaller than some market participants had expected.
“In light of the results of the Tokyo Metropolitan Assembly election on Sunday and the weaker yen, some had expected the Nikkei average to rise to 13,500,” Hirano said.
But some market sources said that the landslide victory by the Liberal Democratic Party and New Komeito in the election raised hopes for a stable administration after the Upper House election in July.
Losers edged winners 852 to 769 on the first section, while 93 issues were unchanged. Volume shrank to 2.293 billion shares from Friday’s 3.340 billion.
Export-oriented companies and resource-related issues met with selling on concerns over China. Air conditioner maker Daikin plunged 6.57 percent, becoming the top percentage loser among Nikkei components.
Industry robot maker Fanuc and construction machinery maker Komatsu suffered hefty losses, as did trader Mitsubishi.
Automakers Toyota and Honda were also downbeat, along with clothing retailer Fast Retailing.
By contrast, nonbank lender Aiful and telecommunications carrier Softbank were upbeat, as were utilities Tokyo Electric and Osaka Gas.
Railway operators JR Tokai and JR East gained ground thanks partly to a UNESCO committee decision to add Mount Fuji to the list of World Heritage sites.
JGB futures inch higher
Japanese government bond futures edged up Monday, helped by the Bank of Japan’s JGB-buying operations and tumbling stocks.
The lead September futures contract on 10-year JGBs closed up 0.05 point from Friday at 142.15. Volume fell to 30,614 contracts from 38,424.
In late interdealer trading in cash JGBs, however, the yield on the latest 329th 10-year JGBs with a 0.8 percent coupon stood at 0.880 percent, up from 0.865 percent late Friday.