Business / Financial Markets

After rally, Nikkei slumps 652 points on renewed virus fears in U.S.

Jiji

Tokyo stocks nose-dived Thursday as concerns grew anew about coronavirus infections in the United States, prompting traders to give up some of their gains from a recent sharp rally.

The Nikkei average of 225 selected issues listed on the first section of the Tokyo Stock Exchange slumped 652.04 points, or 2.82 percent, to end at 22,472.91, after rising 33.92 points on Wednesday.

The Topix index of all TSE first-section issues finished down 35.79 points, or 2.20 percent, at 1,588.92. It lost 3.72 points the previous day.

The Tokyo market opened sharply lower following overnight falls in the Dow Jones industrial average and European equities.

The market was also weighed down by the yen’s strengthening against the dollar as the U.S. Federal Reserve, after a two-day policy-setting meeting that ended Wednesday, said it will likely keep interest rates near zero through 2022, brokers said.

Tokyo stocks accelerated their downswing in the afternoon as a risk-averse mood grew following media reports that the number of coronavirus cases exceeded 2 million in the United States, brokers said.

“Intermittent selling hit Nikkei futures, as the Dow futures widened losses on the Chicago Mercantile Exchange” in off-hours trading, said Masayuki Otani, chief market analyst at Securities Japan Inc.

It was “natural” for the Tokyo market to take a breather after the Nikkei hit its highest in over three months on Monday, he said.

Another brokerage firm official offered the view that the market was also dragged down by speculative selling ahead of Friday’s special quotation fixing to settle June index futures and option contracts.

Falling issues far outnumbered rising ones 1,939 to 203 in the TSE’s first section, while 27 issues were unchanged.

Volume increased to 1.679 billion shares from Wednesday’s 1.257 billion shares.

Automaker Toyota, technology firm Kyocera and other export-oriented issues met with selling due to the yen’s rise against the dollar.

Financials including megabank Mitsubishi UFJ and insurer Tokio Marine lost ground, reflecting a drop in U.S. long-term interest rates.

JXTG, Idemitsu and other oil names fell on pessimism over a quick recovery of the U.S. economy.

Among other major losers were clothing store chain Fast Retailing and technology investor SoftBank Group.

On the other hand, a handful of winners included drug maker Chugai and seasoning producer Ajinomoto.

In index futures trading on the Osaka Exchange, the key June contract on the Nikkei average dived 470 points to end at 22,550.

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