The Nikkei 225 average plunged more 1,000 points Tuesday, battered by a wave of selling by investors who became risk-averse after an overnight tumble in U.S. equities.
The benchmark gauge dived 1,071.84 points, or 4.73 percent, to finish at 21,610.24, the lowest closing level since Oct. 20. The drop was the biggest single-day point loss since June 24, 2016, when the Tokyo Stock Exchange was dragged down by news that Britain has voted to exit the European Union. On Monday, the key market gauge lost 592.45 points.
The Topix, which covers all first-section issues, closed 80.33 points, or 4.40 percent, lower at 1,743.41 after shedding 40.46 points the previous trading day.
Tokyo stocks fell almost across the board after the Dow Jones industrial average plummeted 1,175.21 points, or 4.60 percent, in New York on Monday, incurring the worst one-day point loss ever.
The U.S. market tumble reflected investor worries about a faster pace of interest rate hikes by the U.S. Federal Reserve after U.S. jobs data for January, released Friday, showed a steep increase in wages, brokers said.
The TSE accelerated its downswing in the afternoon as market players stepped up selling to avoid further losses, with the Nikkei briefly giving up over 1,600 points.
The market was also weighed down by the yen’s rise against the dollar. The yen attracted purchases as a safe-haven currency following sharp falls in New York and Tokyo equities, currency traders said.
Stocks, however, attracted buybacks toward the close in line with the yen’s easing, recouping some of their hefty losses.
Ryuta Otsuka, strategist at the investment information department of Toyo Securities Co., said losses in Asian markets dampened the sentiment of investors in the Tokyo market, inducing heavy sell-offs.
Buying on dips was held in check to some extent “due to concerns over further falls in U.S. stocks,” said Tomoaki Fujii, head of the investment research division at Akatsuki Securities Inc.
“Tokyo stocks will unlikely rebound unless Wall Street turns higher,” Fujii said.
Tokyo stocks met with “selling that was unreasonable in terms of their valuations,” Otsuka said, stressing that corporate earnings in Japan are brisk.
Falling issues overwhelmed rising ones 2,027 to 35 in the first section, while three issues were unchanged.
Volume shot up to 3.155 billion shares from 1.881 billion Monday.
Oil companies Japex, Inpex and JXTG met with selling, reflecting lower crude oil prices.
Export-oriented names, including automakers Toyota, Nissan and Honda as well as technology firms Hitachi and Canon, were downbeat, dragged down by the yen’s appreciation.
Other major losers included clothing retailer Fast Retailing, machine tool maker Fanuc and mobile phone carrier SoftBank Group.
By contrast, food producer Maruha Nichiro and automaker Mitsubishi Motors were among a few winners.