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Tokyo stocks fall back on yen’s rise

JIJI

Stocks turned lower on the Tokyo Stock Exchange Wednesday, dragged down by the yen’s ascent against the dollar.

The 225-issue Nikkei average shed 104.94 points, or 0.53 percent, to finish at 19,814.88. On Tuesday, the key market gauge gained 49.97 points.

The Topix index of all first-section issues closed down 8.41 points, or 0.53 percent, at 1,575.82, after rising 4.23 points the previous day.

Selling took the upper hand from the outset of Wednesday’s trading as the dollar dropped below ¥113 due partly to sluggish U.S. economic data released on Tuesday, brokers said.

Weak investor sentiment also reflected growing concerns over U.S. President Donald Trump’s ability to implement policy measures amid confusion following news reports that he has leaked to Russia highly classified information related to the Islamic State militant group, according to brokers.

Mainstay issues, such as export-oriented names and financial institutions, met with selling, pushing down the Nikkei average more than 150 points early in the morning session.

Stocks trimmed the losses thanks to buying on dips, but the key market indexes stayed in negative territory throughout the day.

“In addition to the yen’s rise against the dollar, an overnight fall in Nikkei futures on the CME (Chicago Mercantile Exchange) weighed down the market,” said Kenichi Hirano, market analyst at K Asset Co.

An official of a bank-affiliated securities firm said worries about delays in the implementation of Trump’s pledged tax reform plan increased due to a series of news on Trump after he fired Federal Bureau of Investigation Director James Comey last week.

If disappointment over Trump continues, the dollar could weaken further against the yen, which would in turn likely to push down stock prices, brokers said.

But an official of another securities firm said some stocks backed by brisk corporate earnings attracted buying and supported the market’s downside.

“With the valuations of Japanese stocks having decreased, the market is expected to regain its upward momentum gradually as investors are likely to hunt incentive-backed issues,” Hirano said.

Falling issues far outnumbered rising ones 1,287 to 630 in the TSE’s first section, while 98 issues were unchanged.

Volume fell to 1.96 billion shares from Tuesday’s 2.17 billion shares.

Financial institutions, including mega-bank groups Mitsubishi UFJ, Mizuho and Sumitomo Mitsui, insurer Dai-ichi Life and brokerage firm Nomura met with selling, reflecting overnight falls of their U.S. peers in New York and lower U.S. long-term interest rates.

The higher yen pushed down export-oriented names, such as automakers Toyota, Honda and Subaru, electronics manufacturer Panasonic and electronics parts producer Murata Manufacturing.

Oil companies Idemitsu, Cosmo Energy Holdings and Showa Shell suffered sharp drops due to weaker crude oil prices.

By contrast, game-maker Nintendo, mobile phone carrier SoftBank Group and drugmaker Takeda gained ground.

In index futures trading on the Osaka Exchange, the key June contract on the Nikkei average retreated 110 points to close at 19,770.