TOKYO (Jiji Press) — Tokyo stocks on Friday extended their rout to a third day amid intensifying concerns about the global economy, taking the benchmark Nikkei stock average to a 16-month closing low below 15,000.
The development represents a headwind for Prime Minister Shinzo Abe’s administration, which has tried to reflate the Japanese economy and eliminate deflation on the back of the yen’s weakness and stock price rises.
The 225-issue Nikkei Stock Average on the Tokyo Stock Exchange lost 760.78 points, or 4.84 percent, to close at 14,952.61, its first finish below 15,000 since Oct. 21, 2014.
The dollar remained weak versus the Japanese currency in Tokyo on Friday after hitting a 15-month low below ÂĄ111 in London overnight. At 5 p.m. in Tokyo, the dollar was quoted at ÂĄ112.16-17, down from ÂĄ114.88-89 at the same time Wednesday. The Tokyo markets were closed on Thursday for a national holiday.
Stocks met with heavy selling in the wake of the yen’s jump against the dollar as well as slumps in U.S. and European equity and crude oil prices, market sources said.
In congressional testimony earlier this week, U.S. Federal Reserve Board Chair Janet Yellen indicated a cautious stance on early interest rate hikes, sparking concerns about the course of the U.S. economy.
The bleak U.S. outlook combined with worries about the financial health of oil-producing countries, the sluggish Chinese economy, and credit conditions at European financial institutions, the sources said.
Against this background, risk aversion intensified, causing equity sell-offs and purchases of safe assets, including the yen, around the world, according to the sources.
In Tokyo on Friday, selling hit the stock market across the board, including export-oriented companies such as automakers.
The Tokyo stocks and the dollar trimmed their losses early in the afternoon, backed by speculation that Japanese financial authorities may be preparing to launch yen-weakening intervention.
But the impact of the speculation, which mounted after Abe and Bank of Japan Gov. Haruhiko Kuroda held a meeting, did not last long.
“Stock prices are unlikely to recover unless coordinated international action is taken to ensure global economic recovery,” said a major brokerage house official.
