Stock prices took a beating in Tokyo on Wednesday, the day before the government’s announcement of an economic stimulus package worth roughly 11 trillion yen, with the benchmark Nikkei average plunging more than 3 percent to close below 15,000 for the first time in 19 months.
Observers blamed the lackluster performance on Wall Street’s dip the previous day, as well as on concerns over the continued disarray on the domestic political front; House of Councilors President Juro Saito announced his resignation Wednesday after failing to mediate a proposal to rectify Diet proceedings.
On the Tokyo Stock Exchange, the Nikkei shed 467.74 points to end at 14,872.48. The broader Tokyo Stock Price Index (TOPIX) of all First Section issues rewrote this year’s closing low for a second straight day, losing 30.9 points, or 2.15 percent, to 1,407.26.
The Nikkei closed below 15,000 for the first time since March 8, 1999, when it ended at 14,779.05.
“Given persisting concerns over a slowdown in U.S. corporate earnings, the course of New York share prices remains uncertain, making investors in Tokyo hesitant to actively buy stocks,” said Hiroichi Nishi, head of the products group at Nikko Securities Co.
In New York on Tuesday, the Dow Jones Industrial Average closed sharply lower, losing 149.09 points to 10,089.71, while the Nasdaq composite index dropped 76.32 points to 3,213.96 for the second straight day of decline.
Hiroshi Okuda, chairman of the Japan Federation of Employers’ Associations (Nikkeiren), said the turmoil in the Diet was a major reason behind the stock market plunge and said corrective steps are needed soon.
While Okuda noted that a drop in stock prices in New York was affecting the Japanese market, he added that the political confusion was blocking deliberations on important bills that have to do with the future everyday lives of Japanese citizens.
“The public’s anxiety will not abate if bills concerning employment and their lives after retirement cannot be passed, and that can affect the economic recovery, which is in a delicate stage,” Okuda told a regular news conference.
Meanwhile, Finance Minister Kiichi Miyazawa tried to play down the dismal state of the TSE, telling a regular news conference that Wednesday’s plunge did not reflect the reality of the Japanese economy.
“The domestic economy is improving, and I am not overly concerned,” he said.
The finance chief added that he does not believe the fall in share prices indicates the stock market is disappointed with the economic pump-priming measures the government is to unveil today.
Nishi of Nikko Securities said that, under the circumstances, Tokyo share prices will remain weak for the time being.
Market players are also focusing on developments in the Middle East, now that Israel and the Palestinians have agreed to halt the wave of violence in the region, brokers said.
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