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Nikkei drops below 17,000

JIJI

Stocks lost further ground Thursday, weighed down by an overnight fall in U.S. equities, sending the key Nikkei average below 17,000.

The 225-issue Nikkei lost 108.65 points, or 0.64 percent, to close at 16,892.33 on the Tokyo Stock Exchange, its first finish below 17,000 in three days. On Wednesday, the key market gauge shed 47.57 points.

The Topix index of all first-section issues ended down 9.59 points, or 0.70 percent, at 1,354.61, after falling 5.73 points the previous day.

The Tokyo market opened weaker after U.S. equities fell on Wednesday partly on the back of a plunge in key crude oil futures on the New York Mercantile Exchange.

In addition, recent remarks by U.S. Federal Reserve regional bank presidents hinting at the possibility of the Fed raising interest rates in April dampened risk appetite, brokers said. Fed Bank of St. Louis President James Bullard made such a remark on Wednesday.

The Nikkei sank to as low as 16,843.99 with a loss of some 150 points in early trading. The index then rose back to end the morning session above 17,000 with a gain of about 22 points, with the market attracting buybacks on the back of the yen’s decline against the dollar.

However, the Nikkei slipped back into negative territory in the afternoon while trading remained thin due to a lack of investors ahead of Easter holidays abroad, brokers said.

An official of a bank-affiliated securities firm attributed the day’s fall to a pause in the recoveries of U.S. equities and crude oil prices.

Investor sentiment was also dampened by growing concerns over corporate earnings in Japan as major traders Mitsui and Mitsubishi are likely to post their first annual group net losses ever in fiscal 2015, which ends on March 31, due to massive impairment losses reflecting falls in natural resources prices.

Mitsui said Wednesday that it has revised down its group bottom line estimate for the year to a loss of ¥70 billion from a profit of ¥190 billion. Mitsubishi is seen suffering a net loss of about ¥100 billion, against a profit of ¥300 billion estimated by the company, according to media reports.

Meanwhile, Yutaka Miura, senior technical analyst at Mizuho Securities Co., said the market’s topside looks heavy, but is supported by buying on dips, also noting that stocks of companies that close their books at the end of March are drawing appetite before they go ex-dividend on Tuesday.

Still, the market is unlikely to test its upside unless trading volume increases, Miura indicated.

Falling issues outnumbered rising ones 1,258 to 597 on the TSE’s first section, while 93 issues were unchanged.

Volume grew to about 2 billion shares from Wednesday’s about 1.6 billion shares.

Mitsui and Mitsubishi plunged 7.51 percent and 4.07 percent, respectively, due to the dismal earnings outlooks. Other traders, including Sumitomo, Itochu and Marubeni, also met with heavy selling.

Also on the minus side were oil companies such as Inpex and JX Holdings, and nonferrous metal producers Sumitomo Metal Mining, Mitsui Mining and Smelting, and Mitsubishi Materials.

By contrast, drugmakers including Takeda, Eisai and Ono Pharmaceutical, and some retailers such as Seven & i and Ryohin Keikaku attracted buying.

In index futures trading on the Osaka Exchange, the key June contract on the Nikkei average was down 90 points at 16,720.