Stocks slumped on the Tokyo Stock Exchange Thursday amid growing risk-averse market sentiment on the back of political confusion surrounding U.S. President Donald Trump.
The 225-issue Nikkei average lost 261.02 points, or 1.32 percent, to close at 19,553.86. On Wednesday, the key market gauge shed 104.94 points.
The Topix index of all first-section issues finished down 20.81 points, or 1.32 percent, at 1,555.01, after falling 8.41 points the previous day.
Heavy selling hit the Tokyo market from the beginning of Thursday’s trading after U.S. equities plunged overnight, with the Dow Jones industrial average closing down 1.78 percent.
Export-oriented stocks and other mainstay issues suffered sharp losses as the dollar briefly retreated below ¥111, pushing down the Nikkei average over 360 points in the middle of the morning session.
Stocks resisted further falls in the afternoon in line with a pause in the yen’s rise, but the market stayed deep in negative territory throughout the day.
Investors became increasingly risk-averse due to growing concerns over Trump’s policy management ability following news reports on his suspected leak to Russia of highly classified information related to the Islamic State militants and his alleged attempts to interfere with probes by the Federal Bureau of Investigation, brokers said.
“With expectations fading for Trump’s pledged economic policy measures, investors adjusted their positions to avoid taking too much risk,” said Masashi Itoga of Mito Securities Co.’s Investment Information Department.
“As selling was triggered by the allegations about Trump, stocks could be dragged down further if there is any new development in the matter,” Itoga added.
Still, investors’ buying appetite remain solid, reflecting the actual conditions of the economy, an official of a bank-affiliated securities firm said, citing brisk corporate earnings, as well as stronger-than-expected Japanese gross domestic product data for January-March, released Thursday just before the opening bell.
Quarterly GDP grew at an annualized rate of 2.2 percent in price-adjusted real terms, against a median forecast of a 1.7 rise in a Jiji Press poll of 21 economic research institutes.
“If the Trump-related confusion subsides, buying on dips is expected to increase,” the official said.
Falling issues overwhelmed rising ones 1,574 to 370 in the TSE’s first section, while 71 issues were unchanged.
Volume grew to 2.184 billion shares from Wednesday’s 1.964 billion shares.
Mega-bank groups Mitsubishi UFJ, Sumitomo Mitsui and Mizuho, insurer Dai-ichi Life and brokerage firm Nomura suffered heavy losses.
The higher yen battered export-oriented names, including automakers Toyota, Subaru and Honda, industrial robot-maker Fanuc, semiconductor-related Tokyo Electron, machinery producer Komatsu and air conditioner maker Daikin.
Also on the minus side were mobile phone carrier SoftBank Group and clothing store chain operator Fast Retailing, both heavyweights of the Nikkei average.
By contrast, drugmaker Takeda, daily goods manufacturer Kao, railway operator JR East and Tokyo Gas were buoyant.
Shipping firms Nippon Yusen and Kawasaki Kisen also attracted buying.
In index futures trading on the Osaka Exchange, the key June contract on the Nikkei average fell 200 points to finish at 19,570.