Stocks fell back sharply on the Tokyo Stock Exchange on Friday in the second severe setback this week, with investor sentiment hurt by another plunge in U.S. equities.
The 225-issue Nikkei average plunged 508.24 points, or 2.32 percent, to end at 21,382.62, its lowest closing level since Oct. 18 last year. On Thursday, the key market gauge had risen 245.49 points.
The Topix index of all first-section issues closed down 33.72 points, or 1.91 percent, at 1,731.97, after climbing 15.78 points the previous day.
After a two-day rebound from a deep slump on Tuesday amid global stock selloffs, Tokyo stocks met with hefty selling from the outset of Friday’s trading.
A risk-averse mood prevailed in the Tokyo market after the Dow Jones industrial average plummeted 1,032.89 points, or 4.15 percent, in New York on Thursday on the back of higher U.S. long-term interest rates. The Dow’s drop was the second-biggest single-day point loss on record, after Monday’s 1,175.21-point tumble.
The Nikkei average briefly gave up about 770 points in the morning session.
Tokyo stocks also remained under heavy selling pressure throughout Friday because of the yen’s rise against the dollar, brokers said.
Investor sentiment “turned weak” following the Dow’s recent sharp falls, said Chihiro Ota, general manager for investment research and investor services at SMBC Nikko Securities Inc.
The Dow’s latest plunge was “something like an aftershock” following Monday’s record point loss, said Tomoaki Fujii, head of the investment research division at Akatsuki Securities Inc., who predicted that high volatility in the U.S. market would be reduced eventually.
The Tokyo market’s downside was supported by buybacks to some extent, as the yen’s strengthening came to a halt, noted Yutaka Miura, senior technical analyst at Mizuho Securities Co.
Some market sources attributed the resilience to investor hopes for exchange-traded fund purchases by the Bank of Japan.
But buying was largely held in check prior to the long weekend, Miura said. The Tokyo market will be closed Monday for a national holiday.
The three-day weekend will be beneficial for market participants as they can watch U.S. stock price movements, Fujii said.
Falling issues far outnumbered rising ones 1,796 to 244 in the TSE’s first section, while 24 issues were unchanged.
Volume increased to 2.14 billion shares from Thursday’s 1.82 billion shares.
Megabanks Mitsubishi UFJ, Sumitomo Mitsui and Mizuho and insurers Dai-ichi Life and Tokio Marine were downbeat after their U.S. peers tumbled in New York on Thursday.
Oil companies Cosmo Energy, Inpex and JXTG met with heavy selling, reflecting lower crude oil futures prices.
The stronger yen pushed down such exporters as automaker Toyota, semiconductor-related Tokyo Electron and technology firm Kyocera.
By contrast, precision instrument maker Nikon attracted purchases after announcing on Thursday an upward revision in its operating profit forecast for the year through March.
Also on the plus side were medical equipment manufacturer Terumo, cosmetics maker Shiseido and mobile phone carrier SoftBank Group.