Tokyo stocks plunge by break after Wall Street dive

Tokyo stocks plunge by break after Wall Street dive

Tokyo- Tokyo stocks plunged Thursday morning after a dive on Wall Street while a pick up in the yen took a bite out of exporters like Toyota and factory robotics giant Fanuc.

The Japanese market led a regional sell-off, plunging almost four per cent at the start, as jittery investors reacted to another drop in oil prices and a lukewarm Federal Reserve regional economies report.

Renewed jitters about the world's top economy and broader concerns about global growth pushed currency traders into the yen, which is seen as a safe-haven in times of turmoil.

In Tokyo, the dollar weakened to 117.42 yen (S$1.44), from 117.72 yen in New York.

A stronger yen is bad news for the profitability of Japanese exporters, and it tends to weigh on demand for their shares.

The benchmark Nikkei 225 index at the Tokyo Stock Exchange tumbled 3.66 per cent, or 647.55 points, to 17,068.08 by the break - a day after its first positive close of 2016.

The broader Topix index of all first-section shares fell 3.51 per cent, or 50.56 points, to 1,391.53.

The losses came after Wall Street's three main indexes dropped, with energy firms taking a hammering again as oil prices hit lows not seen since the first half of 2004.

"Negativity is spiraling," Ayako Sera, a market strategist at Sumitomo Mitsui Trust Bank, told Bloomberg News.

"Seeing the drop in New York shares, people are continuing to sell down risk assets in the Tokyo market. Psychologically, investors are too nervous to buy back shares." Plunging oil rates overshadowed a better-than-forecast Chinese trade report, which provided some rare good news about the world's second biggest economy.

Crude prices continue to tumble, with news that US stockpiles had risen last week adding to the sense of gloom. The Brent contract on Wednesday fell below $30 (S$43), a day after the US benchmark West Texas Intermediate (WTI) did the same.

The Fed's closely watched Beige Book report pointed to more sluggish US economic growth.

In Tokyo trading, Toyota shares dropped 3.06 per cent to 6,740 yen, rival automaker Honda plunged 4.05 per cent to 3,460 yen, Sony dropped 4.95 per cent to 2,614 yen and mobile carrier SoftBank tumbled 3.95 per cent to 5,467 yen.

Factory robotics firm Fanuc dived 4.36 per cent to 18,555 yen, while market heavyweight Fast Retailing, operator of the Uniqlo chain, was down 3.93 per cent to 37,170 yen.

Banking giant Mitsubishi UFJ fell 3.87 per cent to 672.9 yen. As morning trade finished, an official announcement confirmed that the company has agreed to buy a 20 per cent stake in Philippine-based Security Bank for about US$774 million.

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