TOKYO: Tokyo shares sank Wednesday morning as a plunge in oil prices hit commodity firms, while a stronger yen also weighed on exporters.
A decision by the OPEC cartel last week not to cut crude output preceded another slide in prices to levels not seen for seven years as investors fret about an oversupply and weak demand in the struggling global economy.
“With oil this cheap, the finances of oil-producing nations will be in a tough spot,” Chihiro Ohta, general manager of investment information at SMBC Nikko Securities, told Bloomberg News.
The Nikkei 225 at the Tokyo Stock Exchange fell 1.08 percent, or 211.14 points, to 19,281.46 by the break, while the broader Topix index of all first-section shares slipped 0.89 percent, or 14.04 points, to 1,554.69.
“Concerns about oversupply and waning demand for a range of commodities have weighed on core global equity indices with energy and mining stocks leading the selloff,” National Bank of Australia strategist Rodrigo Catril wrote in a client note.
Steel producer JFE Holdings tumbled 2.66 percent to 1,880.5 yen, while mining equipment maker Komatsu was down 1.2 percent to 1,963.5 yen.
But a slight uptick in oil prices — while marginal compared with the more than eight percent losses since Friday — helped JX Holdings rebound 1.32 percent to 504.8 yen and Inpex rise 0.94 percent to 117.5 yen. they had suffered sharp falls Tuesday.
The yen picked up — a negative for Japanese exporters’ profitability — after better-than-expected revised Japanese GDP data Tuesday tempered expectations for more stimulus by the Bank of Japan.
The dollar slipped to 122.78 yen from 122.97 yen in New York and is well down from levels above 123 yen in Asia earlier Tuesday.
