The benchmark Nikkei stock index plummeted more than 600 points Tuesday as investors were spooked by the likelihood of further U.S. interest rate hikes and an admission by Bank of Japan Gov. Toshihiko Fukui that he has 10 million yen in an investment fund linked to insider trading.
The plunge was the Nikkei’s biggest single-day point loss since the Sept. 11, 2001, terrorist attacks in the U.S.
The 225-issue Nikkei stock average fell 614.41 points, or 4.14 percent, to end the day at 14,218.60, its lowest close since Nov. 16, 2005, and its largest drop since Sept. 12, 2001, when it plunged 682.85 points.
The tech-laden Topix index of all first section issues on the Tokyo Stock Exchange lost 52.59 points, or 3.48 percent, to close at 1,458.30, its lowest level since Oct. 31, 2005.
Shares here got off to a weak start, tracking sharp overnight falls in many overseas markets, including the United States, brokers said.
The selling intensified after Fukui told a Diet committee in the morning that he invested 10 million yen in 1999 in an investment fund founded by Yoshiaki Murakami, the outspoken investor activist who was arrested June 5 on suspicion of insider trading.
Investors were already nervous ahead of the U.S. inflation data scheduled for release later this week, and Fukui’s admission just added fuel to the fire.
“Gov. Fukui’s remarks raised various negative speculation,” said Hiroaki Kuramochi, managing director at Bear Stearns (Japan), Ltd.
In addition, weak performances by Indian and other Asian stocks in the afternoon added downward pressure on Japanese stocks, sending the major indexes sharply lower toward the end of the day, brokers said.
Brokers said investors were increasingly concerned that additional interest rate hikes by the U.S. Federal Reserve could slow down the warming U.S. economy, impacting one of the main engines of global growth.
Those worries weighed on high-tech, automotive and other companies that make the bulk of their profits abroad. Sony tumbled 3 percent, while Toyota and Honda lost about 4 percent each.
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