Caught in global stock sell-offs, the benchmark Nikkei average tumbled below the psychologically important 20,000 line and hit the lowest level in more than three months on the Tokyo Stock Exchange on Friday.
The Nikkei 225 average plunged 597.69 points, or 2.98 percent, to finish at the day’s low of 19,435.83, the lowest closing level since May 8, 2015, after falling 189.11 points on Thursday. The key market gauge last closed below 20,000 on July 10.
The Topix index of all first-section issues dived 50.87 points, or 3.13 percent, to end at 1,573.01, after dropping 24.60 points the previous day.
Both indexes extended their losing streak to a fourth session.
From the outset of Friday’s trading, heavy selling dealt a blow to the Tokyo market, pushing down the Nikkei average below 20,000 for the first time since July 13 on an intraday basis.
The selling came after the Dow Jones industrial average skidded below 17,000 for the first time in some 10 months on Thursday in the wake of a slump in Chinese stocks.
Investor sentiment was also hurt by worse-than-expected Chinese manufacturing industry purchasing managers’ index for August, released Friday by private firms, brokers said.
In the afternoon, the Nikkei average extended losses to over 500 points, affected by the yen’s strengthening against the dollar and a further drop in Chinese stocks. The Nikkei slipped below 19,500 in late afternoon trading due chiefly to increased position-adjustment selling, brokers said.
A wide range of issues, including exporters and domestic demand-oriented names, were battered. Selling triggered selling in the afternoon on heightened worries that global equity sell-offs will not come to an immediate halt, brokers said.
Investors found it difficult to buy amid strong concerns over the Chinese stock market, despite growing belief that Japanese stocks have been undervalued, an official at a midsize brokerage firm said.
“Risk aversion moves have been increasing,” said Chihiro Ota, general manager for investment research and investor services at SMBC Nikko Securities Inc. “The Nikkei’s downside is expected to be around 19,000, or its 200-day moving average,” which stood at 18,967.04 as of Thursday, Ota said.
Falling issues far outnumbered rising ones 1,854 to 33 in the TSE’s first section, while four issues were unchanged.
Volume increased to 2.8 billion shares from Thursday’s 2.1 billion shares.
All 33 first-section sector subindexes closed lower.
Automakers Toyota, Honda and Nissan were downbeat, along with electronics giants Toshiba, Sony and Hitachi.
China-related issues, including robot maker Fanuc and construction machinery maker Komatsu, lost further ground.
In the financial sector, mega-bank groups Mitsubishi UFJ and Sumitomo Mitsui, insurer Dai-ichi Life and brokerage firm Nomura came under selling.
On the other hand, a handful of winners included dairy products maker Morinaga Milk Industry and TV Tokyo Holdings.
In index futures trading on the Osaka Exchange, the key September contract on the Nikkei average plunged 610 points to end at 19,430.