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Stocks fall further as yen climbs

JIJI

Stocks lost further ground on the Tokyo Stock Exchange Thursday, dragged down by the yen’s ascent against the dollar.

The Nikkei average fell 146.26 points, or 0.85 percent, to close at 17,044.99. On Wednesday, it dived 559.43 points.

The Topix ended down 17.46 points, or 1.24 percent, at 1,388.81, after losing 45.77 points the previous day.

Selling took the upper hand from the outset of Thursday’s trading, briefly pushing down the Nikkei average below 17,000 early in the morning session. Worries about deteriorated earnings at export-oriented companies weighed down the market due to the higher yen.

The dollar’s fall was caused by weaker-than-expected U.S. economic data and dovish remarks by U.S. Federal Reserve Bank of New York President William Dudley, brokers said.

With the market’s downside limited after overnight rebounds in the Dow Jones industrial average and the key West Texas Intermediate crude oil futures contract in New York, however, the Nikkei briefly popped up into positive territory in the afternoon, according to brokers.

Masashi Oguchi of Mito Securities Co.’s Investment Information Department, said Dudley, who was said to be a hawkish policymaker, seems to have softened his attitude regarding the need for an interest rate hike.

In addition to Dudley’s perceived new policy stance, “the dismal ISM (Institute for Supply Management) nonmanufacturing activity index for January, a particularly important indicator to gauge U.S. economic activities, strengthened the risk-averse mood in financial markets, leading to the yen’s rise,” he said.

Although undervalued stocks briefly attracted buying after the Nikkei fell below 17,000, concerns over deteriorated earnings hit export-oriented companies, such as electronics makers, Oguchi added.

An official of another securities firm said market participants became more nervous about the yen’s exchange rate movements, which affect corporate earnings, at a time when a series of earnings reports for October-December are released by major Japanese companies.

Falling issues far outnumbered rising ones 1,541 to 322 in the TSE’s first section, while 72 issues were unchanged.

Volume grew to 3,128 million shares from Wednesday’s 3,103 million shares.

Among exporters, automakers Toyota, Fuji Heavy and Mazda, electronics parts producer Murata Manufacturing, electronics maker Sony and tire manufacturer Bridgestone, met with selling.

Hitachi and Panasonic fell sharply a day after the technology giants revised down their earnings estimates for the current fiscal year through March.

By contrast, Sharp surged 16.79 percent on news that the struggling electronics maker has decided to receive support from Taiwan’s Hon Hai Precision Industry, instead of government-affiliated Innovation Network Corp. of Japan, for business turnaround.

Another electronics maker Toshiba cut earlier losses to end higher after the news of Sharp. Hopes grew that Toshiba will receive full support from INCJ, brokers said.

In index futures trading on the Osaka Exchange, the key March contract on the Nikkei average finished down 90 points at 17,070.