Stocks plummeted Monday as investors shied away from risk assets on mounting worries about a global economic slowdown.
The Nikkei 225 average tumbled 650.23 points, or 3.01 percent, to end at 20,977.11, its first closing below 21,000 since Feb. 15. On Friday, the key market gauge rose 18.42 points.
The Topix, which covers all first-section issues on the Tokyo Stock Exchange, finished 39.70 points, or 2.45 percent, lower at 1,577.41 after gaining 2.72 points Friday.
The market took a nosedive right after the opening bell, hit by severe selling by investors who turned risk averse in view of sell-offs in the European and U.S. markets following the release of weak manufacturing data, brokers said.
Concerns over the course of the global economy grew in the wake of drops in purchasing managers’ indexes in Germany, France and the United States, analysts said.
The yen’s sharp rise against the dollar on safe-haven demand and falls in other Asian stocks also battered sentiment here, brokers said.
A drop in the key 10-year interest rate below the three-month rate in the U.S. on Friday fueled the slowdown fear, as the “inverted interest rate” is widely regarded as a prelude to a recession, an official at an asset management firm said.
Japanese long-term interest rates also dropped Monday, with the yield on the benchmark 10-year government bond hitting the lowest level in two years and seven months.
Stocks remained deep in negative territory throughout the day. But speculation about the Bank of Japan’s purchases of exchange-traded funds and buying to secure rights to receive dividends for fiscal 2018, which ends Sunday, somewhat underpinned the market, said Hiroaki Kuramochi, chief market analyst at Saxo Bank Securities Ltd.
Referring to the U.S. Federal Reserve’s recent “dovish turn,” which has made some players anticipate even an interest rate cut this year, Kuramochi said the TSE “hinges on moves of the dollar-yen pair this week.”
Falling issues overwhelmed rising ones 2,014 to 104 in the first section, while 22 issues were unchanged.
Volume decreased to 1.327 billion shares from 1.365 billion Friday.
The stronger yen battered export-oriented issues. Industrial equipment manufacturers Fanuc sagged 3.84 percent and Yaskawa Electric 5.35 percent, and electronic parts supplier Murata Manufacturing lost 3.14 percent.
Mega-bank groups including Sumitomo Mitsui Financial were hurt by the interest rate drops along with insurers and other financials.
Technology investor SoftBank Group, clothing store chain Fast Retailing and drugmaker Eisai were also among major losers.
The handful of winners included furniture retailer Nitori and Mitsubishi Logistics.