Stocks tumbled on the Tokyo Stock Exchange on Friday, with investor sentiment dampened after the European Central Bank’s monetary easing steps failed to meet high market expectations.
The Nikkei average dived 435.42 points, or 2.18 percent, to end at 19,504.48. On Thursday, the index rose 1.77 points.
The Topix finished down 28.92 points, or 1.80 percent, at 1,574.02, after inching up 0.68 point the previous day.
Tokyo stocks met with heavy selling from the outset of Friday’s trading, following sell-offs in Europe and the United States overnight as the ECB’s decision fell short of market expectations, brokers said.
At Thursday’s monetary policy-setting meeting, the ECB decided to cut its deposit rate further into negative territory and extend the period of its asset purchase program on the current scale.
As the decision did not live up to investor expectations of an increase in the amount of the ECB’s asset purchases by €20 billion to €30 billion per month, hopes for further money inflows into markets receded, triggering stock sell-offs, according to brokers.
In the afternoon, the Tokyo market came under renewed selling and extended its losses, briefly pushing the Nikkei down nearly 500 points.
But market participants apparently downplayed the sharp stock fall as the plunge came after “excessive” investor expectations of ECB monetary easing, an official of a major securities firm said. “The selling on disappointment at the ECB decision is expected to be temporary,” the official said.
The downside is expected to be limited by hopes for economic stimulus measures by the Japanese government, as well as by expectations that the yen may fall against the dollar after an anticipated interest rate hike by the U.S. Federal Reserve on the back of the strength of the U.S. economic recovery, brokers said.
Masayuki Otani, chief market analyst at Securities Japan Inc., said investor attention now focuses on U.S. jobs data for November, due out later Friday.
“If the U.S. nonfarm payroll growth meets market expectations and the currency market shows stable movements, the Nikkei average could rise back above 20,000 next week,” Otani said.
Falling issues overwhelmed rising ones 1,696 to 160 in the TSE’s first section, while 65 issues were unchanged.
Volume grew to 2,047 million shares from Thursday’s 1,863 million shares.
All 33 sector subindexes in the first section closed lower.
Among major losers were shipping firms Mitsui O.S.K. Lines and Kawasaki Kisen, realtors Mitsubishi Estate and Mitsui Fudosan, and mega-banks Mizuho and Mitsubishi UFJ.
Automaker Toyota, electronics producer Sony and industrial robot manufacturer Fanuc were also downbeat.
Mobile phone carrier SOFTBank Group met with selling after its Chinese online commerce affiliate Alibaba plunged in New York trading on Thursday.
By contrast, Fujitsu surged on a news report that the electronics maker and industry rivals Toshiba and Sony plan to integrate their personal computer businesses.
In index futures trading on the Osaka Exchange, the key December contract on the Nikkei average dived 480 points to close at 19,460.