Tokyo stocks dived Monday, in the wake of a rise in U.S. long-term interest rates and the BOJ’s decision last week to end its purchases of exchange-traded funds linked to the benchmark Nikkei average.
Semiconductor supply shortage fears also dampened sentiment.
The 225-issue Nikkei average fell 617.90 points, or 2.07%, to close at 29,174.15, after sinking 424.70 points on Friday.
The Topix index of all first section issues ended 22.03 points, or 1.09%, lower at 1,990.18 to snap its nine-day winning streak. The index gained 3.70 points the previous trading day.
Selling took the upper hand from the outset, following a spike in long-term U.S. Treasury yields on the Federal Reserve’s announcement Friday that it will not extend its special bank capital relief, set to expire on March 31.
The Nikkei’s components were particularly hit hard by the BOJ’s new ETF purchase plan covering only TOPIX-linked funds.
In addition, Renesas Technologies’ announcement that its fire-hit semiconductor plant in Ibaraki Prefecture may take a month before becoming able to resume production sparked selling of the automobile sector, which has already been weighed down by a global chip shortage.
“Although the BOJ has not bought much Nikkei-linked ETFs recently, the decision to remove them from the purchase program adversary affected investor psychology,” Kazuo Kamitani, strategist at Nomura Securities Co., said.
A bank-affiliated brokerage house official also pointed out that the TOPIX’s nine-day bull run fueled overheating worries.
Meanwhile, Masayuki Otani, chief market analyst at Securities Japan Inc., gave an upbeat assessment on the day’s trading.
“Many stocks were not affected by the higher U.S. interest rates or the BOJ’s move,” he said.
On the TSE first section, decliners outnumbered gainers 1,190 to 908, while 97 issues were unchanged. Volume plummeted to 1.384 billion shares from Friday’s 2.101 billion shares.
Leading Nikkei component Fast Retailing tumbled 4.54%.
Renesas dived, by 4.88%, and so did auto parts maker Deso, by 4.94%, and automaker Toyota, by 3.26%.
On the other hand, shipping names Mitsui O.S.K. Lines and Kawasaki Kisen jumped 5.27% and 4.73%, respectively.
Other winners included Fujifilm Holdings and optical equipment-maker Olympus.
In index futures trading on the Osaka Exchange, the key June contract on the Nikkei average dived 560 points to 28,930.
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