TOKYO: Tokyo stocks dropped 1.27 per cent as a raise in the yen hit exporters, overshadowing Wall Street’s strong lead and a rally in energy shares.
The Nikkei 225 index at the Tokyo Stock Exchange on Tuesday fell 222.19 points to close at 17,335.85, while the Topix index of all first-section shares was down 1.16 per cent, or 16.36 points, at 1,392.39.
The market swung in and out of positive territory as the higher oil prices boosted energy firms, but hit tyre-makers and airlines.
Crude enjoyed some much-needed buying after data showed the recent slump in prices has led to a decline in the number of rigs drilling.
US benchmark West Texas Intermediate for March delivery rose 36 US cents to $US49.93 while Brent crude for March rose 18 US cents to $US54.93.
On Wall Street, the Dow closed up 1.14 per cent on Monday, the S&P 500 jumped 1.30 per cent and the Nasdaq gained 0.89 per cent.
The oil price rise will come as welcome relief for markets after oil slumped more than 50 per cent from its June 2014 peak owing to a global glut and a strong dollar.
“A sense of relief is beginning to spread among investors,” Toshihiko Matsuno, chief strategist at SMBC Friend Securities, told Bloomberg News.
“We’re also seeing some easing of worries over a slowdown in economic growth and less risk of defaults or credit downgrades of countries and companies.”
However, the rising yen took the wind out of the market.
A strong yen is negative for Japanese exporters as it makes them less competitive abroad and trims profits when repatriated.
In forex trading, the greenback bought Y116.96, compared with Y117.64 in New York.
In share trading, Bridgestone dropped 3.28 per cent to Y4,480.5, Toyo Tire & Rubber was 4.42 per cent lower at Y2,529.0 and Japan Airlines dropped 5.22 per cent to Y3,720.0.
Energy giant Inpex jumped 6.88 per cent to Y1,381.5, while Sony fell 0.03 per cent to Y2,697.5 after Credit Suisse raised its price target on the stock and the technology giant announced the sale of its US-based online games unit.
