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Wall Street fall takes wind out of Nikkei’s sails

JIJI

Stocks retreated Thursday, bruised by lower U.S. equities and a higher yen, while investors continued to hunt for fast-moving issues on startup markets.

The Nikkei 225 average lost 95.95 points to close at 14,973.53. On Wednesday, the key market gauge gained 74.68 points. The Topix fell 1.32 points to end at 1,237.35 after rising 10.34 points Wednesday.

Selling outpaced buying from the outset of Thursday’s trading on the Tokyo Stock Exchange after the Dow Jones industrial average dropped for the first time in six trading days overnight and the dollar briefly fell below ¥102, brokers said.

A sense of market overheating, as signaled by the advance-decline ratio and other technical indicators, induced investors to unload stocks, with futures-led selling accelerating the market’s downswing, brokers said.

After the Nikkei briefly plunged more than 200 points in the morning, stocks recouped some earlier losses as the yen edged lower, brokers said.

“The yen has been moving on a firm note since the ECB (European Central Bank) announced its decision last week to introduce a negative interest rate on commercial banks’ deposits,” said Toshikazu Horiuchi of Iwai Cosmo Securities Co.’s investment research department. “This (the yen’s strength) is the biggest reason for today’s fall (in Tokyo).”

But the upward momentum in startup markets suggests investors are expecting stocks to climb, Horiuchi added.

Falling issues outnumbered rising ones 994 to 672 in the first section, while 147 issues were unchanged. Volume grew to 2.104 billion shares from Wednesday’s 1.787 billion.

JGB futures rise

Japanese government bond futures rebounded Thursday following a drop in stock prices and the yen’s appreciation.

The lead September contract on 10-year JGBs finished up 0.08 point from Wednesday at 145.24. Volume decreased to 24,818 contracts from 25,973.

In late interdealer trading in cash JGBs, the yield on the latest 334th 10-year issue with a 0.6 percent coupon stood at 0.595 percent, down from 0.600 percent late Wednesday.

The key futures contract opened firmer on the heels of an overnight drop in U.S. equities and the yen’s firming.