Stocks lost further ground Wednesday as the yen ascended, pushing the Nikkei average below 16,000.
The Nikkei retreated 136.26 points, or 0.85 percent, to finish at 15,915.79 on the Tokyo Stock Exchange. On Tuesday, it dropped 59.00 points.
The Topix index closed down 6.64 points, or 0.51 percent, at 1,284.53, after falling 8.83 points the previous day.
Tokyo stocks opened weaker after European and U.S. equities fell back on Tuesday, with the Nikkei losing the 16,000 line.
The Dow lost more than 1 percent, weighed down by a sharp fall in crude oil futures. Investor sentiment was also dampened by weak readings of the U.S. Conference Board’s consumer confidence index for February, brokers said.
In the face of the yen’s rise, triggered by concerns over Britain’s possible breakup with the European Union, the Nikkei briefly plunged 290 points.
Stocks cut losses late in the morning session after Shanghai equities recouped earlier losses and the Nikkei regained 16,000. But it soon fell back, led by losses in export-oriented issues, such as automakers and electronics producers, and moved weaker for the rest of the day.
Investors found it difficult to activate purchases when the dollar was trading below ¥112, said Kenichi Hirano, market analyst at K Asset Co.
“The dollar’s recent brief fall below ¥111 could be regarded as irregular, but the dollar’s stable movements below ¥112 today are scary for investors,” Hirano added.
An analyst at another Japanese securities firm said that the Nikkei average is unlikely to see a sharp rebound, as the dollar’s fall below ¥112 will inevitably have negative effects on the earnings of export-oriented companies.
“In the absence of domestic buying incentives, the market is expected to remain vulnerable to external factors,” such as China’s economic conditions, movements of crude oil prices and the yen’s exchange rate swings, Hirano said.
“If the yen continues strengthening, concerns will increase over deteriorated earnings at export-oriented companies and an economic setback, resulting in further falls in stock prices, an official of an asset management firm official warned.
Falling issues outnumbered rising ones 1,041 to 767 in the TSE’s first section, while 133 issues were unchanged. Volume dwindled to 2.205 billion shares from Tuesday’s 2.322 million shares.
Among export-oriented names, automakers Toyota, Mazda and Honda, industrial robot manufacturer Fanuc, electronic parts producers Murata Manufacturing, Alps Electric and TDK, and air conditioner maker Daikin fell sharply.
Clothing store chain operator Fast Retailing and mobile phone carrier KDDI, both heavily weighted components of the Nikkei average, also met with selling.
By contrast, banks, including banking groups Mitsubishi UFJ, Sumitomo Mitsui and Mizuho, gained ground thanks to buying on dips.
In index futures trading on the Osaka Exchange, the March contract on the Nikkei average ended down 240 points at 15,860.