TOKYO: Tokyo stocks sank 0.95% in early trade, with exporters disturbed by a powerful yen and a shareholders booked year-end profit.
The benchmark Nikkei 225 index at the Tokyo Stock Exchange, which lost three percent over the past two days, fell 164.97 points to 17,247.61 by the break. The Topix index of all first-section issues was down 0.93 percent, or 13.10 points, to 1,393.73.
The dollar was trading at 118.20 yen in Tokyo late morning trade, rebounding from 117.63 yen earlier and up from 117.85 yen in New York late Wednesday. However, it is well down from the seven-year high of 121.84 yen touched Monday.
Analysts said the move presaged further volatility in exchange rates, with speculators looking to take advantage of a growing spread between US Treasury and Japanese government bonds.“It’s clear that both the dollar and the Nikkei have been overbought,” said Kazuyuki Terao of Allianz Global Investors.
“Investors are likely to keep taking profits for the time being, at least until upcoming events,” including Sunday’s lower house election in Japan, he said.
The US Federal Reserve’s take on the economy next week “will be the next point of interest”, he said, adding “if the US looks like it’s clearly on the path to recovery, then both the dollar and the Nikkei may resume rising through the calendar year-end”.
Eiji Kinouchi, chief technical strategist at Daiwa Securities, added: “Large overseas hedge funds and other hedged investors are making their year-end position adjustments, booking profits.”
Falls were led by exporters, with Toyota losing 0.78 percent to 7464.0 yen and Sony dropping 2.17 percent to 2,449.5 yen.
Skymark Airlines surged 10.33 percent to 299 yen after soaring 17.31 percent Wednesday on news that the struggling Japanese budget carrier is considering asking for help from domestic giant All Nippon Airways (ANA) as well as signing a tie-up with Japan Airlines.
An ANA spokesman told AFP talks over code-sharing as the main pillar of that assistance “will start next week or later”.
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