Nikkei pares losses after hitting 1-yr low

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TOKYO: Tokyo shares pared losses after hitting a one-year low in intra-day trade Monday, as the yen’s continuing strength dented exporters and another fall in oil prices hit petroleum-linked stocks after sanctions against major crude producer Iran were lifted.

Brent prices briefly fell below $28 a barrel on Monday amid fears of a worsening supply glut, which – along with weak demand and a slowing global economy – has seen prices slump by about three quarters since mid-2014.

Energy firms were among the big losers in Tokyo, with petroleum explorer Inpex tumbling 1.45 percent and JX Holdings down 0.92 percent.

In Tokyo, the benchmark Nikkei 225 index declined 1.12 percent, or 191.54 points, to finish at 16,955.57, paring a 1.94 percent drop at the lunch break after hitting a one-year low.


The broader Topix index of all first-section shares lost 1.04 percent, or 14.52 points, to 1,387.93.

“There’s a lot of speculative trading going on,” Naoki Fujiwara, chief fund manager at Shinkin Asset Management, told Bloomberg.

“At these levels, we should be seeing some buying back of positions,” Fujiwara added.
“But the global environment hasn’t calmed down yet, so it’s hard to take the leap.”

The blue-chip Nikkei, closing at its lowest level since late September, has now fallen nearly 11 percent since the start of the year and is off more than 18 percent from its high on June 24.

The latest slump came after global financial markets booked heavy declines on Friday as investors reacted to a 3.6 percent drop in China’s key Shanghai Composite Index.

Wall Street saw sharp losses with the Dow finishing down 2.39 percent, the S&P 500 dropping 2.16 percent and the Nasdaq tumbling 2.74 percent.

US markets are closed Monday for a public holiday.

In currency trading, the dollar traded below its level in Tokyo on Friday. A stronger yen hurts the profitability of Japan’s exporters, thus tending to knock demand for their shares.

The greenback rose to 117.10 yen from 116.96 yen Friday in New York, but was off from 117.61 yen in Tokyo on Friday.

In other shares trading, telecom giant SoftBank slipped 7.87 percent to 5,111 yen after US subsidiary Sprint lost 10 percent in New York on Friday.

Toyota ticked down 0.25 percent to 6,742 yen, while China-linked factory robotics firm Fanuc declined 1.10 percent to 18,310 yen.

AFP

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