Stocks lost ground Thursday, taking their lead from a fall in U.S. equities overnight.
The Nikkei 225 average plunged 174.41 points to close at 14,327.94, erasing most of its 176.37-point gain Wednesday.
The Topix ended down 10.24 points at 1,194.26, a day after rising by 11.00 points.
The TSE came under selling pressure as New York stocks lost momentum after the U.S. Federal Reserve kept its quantitative easing measures intact.
While the Fed’s decision was in line with market expectations, its assessment of the U.S. economy turned out to be “not as pessimistic” as market participants had expected, brokers said.
The somewhat surprising outcome led to speculation that the Fed’s monetary easing may not remain intact much longer, which dragged the U.S. market down, brokers said.
While the TSE lacked fresh trading incentives, investors moved to lock in profits by selling mostly major issues, an official at a bank-affiliated brokerage said, adding that a slowdown in the yen’s recent falls against other major currencies also encouraged profit-taking.
The market took a plunge toward the end of the session due to a wave of futures-led selling.
Caution was dominant in the market as investors sat on their hands to wait for a host of corporate earnings reports for the half-year period through September, brokers said.
Investors quickly acted on freshly reported earnings as well as estimates for the full year to March, with shipping firms being battered particularly hard.
“Market players may have set the bar too high,” said Ryuta Otsuka, a strategist at Toyo Securities Co. Since players had been somewhat too optimistic about half-year earnings, the actual figures, if not so gloomy, look rather disappointing because they are below market consensus, he said.
Falling issues outnumbered rising ones 1,143 to 508 in the first section, while 104 issues were unchanged.
Volume fell to 2.815 billion shares from 3.480 billion Wednesday.
Japanese government bond futures fell back slightly Thursday, weighed down by weaker U.S. Treasuries and wariness over high prices.
The lead December contract on 10-year JGBs closed down 0.05 point at 145.07. Volume decreased to 16,447 contracts from Wednesday’s 20,022.