Financial Markets

Tokyo stocks extend losses amid risk-averse mood

Jiji

Tokyo stocks extended losses Wednesday, as a risk-averse mood continued amid a historic collapse in crude oil prices due to a cratering of demand caused by the coronavirus pandemic.

The 225-issue Nikkei average dropped 142.83 points, or 0.74 percent, to end at 19,137.95, after temporarily falling below 19,000 for the first time since April 8 on an intraday basis. On Tuesday, the key market gauge lost 388.34 points.

The Topix index of all Tokyo Stock Exchange first-section issues closed down 8.99 points, or 0.63 percent, at 1,406.90. It sagged 16.52 points the previous day.

The Nikkei average temporarily fell over 400 points early in the morning, as selling hit a wide range of issues following Tuesday’s dive of the U.S. Dow Jones industrial average amid historic crude oil price drops, brokers said.

But after the initial selling ran its course, the market resisted falling further, supported by speculation about exchange-traded fund purchases by the Bank of Japan in the afternoon, brokers said.

The key May contract on West Texas Intermediate (WTI) crude oil futures nose-dived and turned negative for the first time ever Monday, the day before its expiration, and the June contract dropped over 40 percent on Tuesday.

“The shocking WTI price movements for the May and June contracts made investors again aware of a serious economic impact the crude price collapse would have on economic activities,” said Hirohumi Yamamoto, strategist at Toyo Securities Co.

Falling issues outnumbered rising ones 1,629 to 496 in the TSE’s first section, while 43 issues were unchanged.

Volume decreased to 1.25 billion shares from Tuesday’s 1.28 billion shares.

Oil names such as JXTG and Idemitsu met with selling due to a fall in the WTI June futures contract.

Automaker Toyota, technology firm Hitachi and other export-oriented issues fell amid persistent concerns over a global economic slowdown due to the spreading coronavirus outbreak.

Financials such as mega-bank group Mitsubishi UFJ and insurer Dai-ichi Life lost ground, reflecting lower U.S. long-term interest rates.

Among other major losers were technology investor SoftBank Group and cosmetics giant Shiseido.

On the other hand, Tokyo Gas and other gas companies attracted purchases thanks to lower crude oil prices.

Also on the positive side were clothing store chain Fast Retailing and air conditioner-maker Daikin.

In index futures trading on the Osaka Exchange, the key June contract on the Nikkei average plunged 300 points to end at 19,020.

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