Pressured by the yen’s appreciation against the dollar and other major currencies, stocks gave up earlier gains to close substantially lower on the Tokyo Stock Exchange on Monday.
The 225-issue Nikkei average lost 161.65 points, or 1 percent, to finish at the day’s low of 16,026.76. On Friday, the key market gauge climbed 48.07 points.
The Topix index of all first-section issues closed down 13.42 points, or 1.02 percent, at 1,297.85, after advancing 3.73 points the previous trading day.
Tokyo stocks got off to a firmer start after the finance ministers and central bank chiefs of the Group of 20 advanced and emerging economies agreed at their two-day meeting in Shanghai through Saturday to use “all policy tools,” including fiscal measures, to stabilize financial markets.
The dollar’s rise above ¥113 and Japan’s stronger-than-expected industrial production data in January, released just before the opening bell, also encouraged buying, pushing the Nikkei average up by over 270 points at one point in the early morning.
But after the initial buying ran its course, the market’s topside grew heavy as the yen regained strength and investors moved to secure profits.
Investor sentiment was dampened by China’s lowering of the yuan’s reference rate against the dollar despite a G-20 agreement to stop competitive currency devaluations, brokers said.
Tokyo stocks expanded their losses in the afternoon on continued yen buying.
“China’s devaluation of the yuan immediately after the G-20 meeting was surprising,” a bank-affiliated securities firm official said.
“Investors took heart from the outcome of the meeting and the easier yen in the morning, but their sentiment was chilled by the Chinese move and a plunge in Shanghai shares later,” said Hiroaki Hiwada, strategist at Toyo Securities Co.
Hiwada added that the market’s topside is expected to remain heavy ahead of announcements of a series of key economic indicators later this week, including U.S. jobs data for February.
Falling issues outnumbered rising ones 1,294 to 545 in the TSE’s first section, while 102 issues were unchanged.
Volume grew to 2.49 billion shares from Friday’s 2.16 billion.
Such export-oriented names as automakers Toyota and Honda, electronics parts producer Murata Manufacturing, tire maker Bridgestone and industrial robot maker Fanuc erased gains to close lower.
Sharp extended its losing streak to a fourth session on news that it and Taiwan’s Hon Hai Precision Industry extended the deadline for a bailout deal for the ailing Japanese electronics maker.
Other major losers included oil companies JX Holdings and Inpex, mobile phone carrier SoftBank, and mega-banks Mitsubishi UFJ and Sumitomo Mitsui.
By contrast, drug makers Astellas and Ono Pharmaceutical as well as another mobile carrier, KDDI, were buoyant.
In index futures trading on the Osaka Exchange, the key March contract on the Nikkei average was down 330 points at 15,930.