• Tokyo stocks dive after quakes, oil freeze talks fail

    0

    TOKYO: Tokyo stocks were hit by a sell-off Monday morning as Japan’s deadly quake disaster brought regional factories to a grinding halt, threatening companies’ bottom line, while plunging oil prices hit energy firms.

    Toyota, Sony and Honda each lost at least four percent as their production lines on Japan’s southwestern island of Kyushu remained offline in the wake of the powerful quakes that killed a combined 42 people.

    At the break, the benchmark Nikkei 225 index dived 2.99 percent, or 503.94 points, to 16,344.09, while the broader Topix index of all first-section shares lost 2.90 percent, or 39.42 points, to 1,321.98.

    Energy companies suffered heavy selling after the collapse of weekend talks in Doha between major oil producing countries to cap output, which sent crude prices tumbling more than four percent.

    Hopes had been higher that a deal could be reached to address a global glut that has hammered the commodity for the past two years.

    But Saudi Arabia said it would not take part in a collective freeze that did not include major rival Iran. Tehran had refused to take part as it has only recently resumed exports after the lifting of Western nuclear-linked sanctions.

    Petroleum-linked stocks tracked the sharp drop in oil prices, with energy-explorer Inpex down 4.91 percent at 814.1 yen and JX Holdings off 1.80 percent at 447 yen.

    The disappointment battered Asian stock markets and send investors rushing for safe haven investments, including the yen, which is a go-to asset in times of turmoil and uncertainty.

    In Tokyo, the greenback dropped to 108.01 yen from 108.75 yen Friday in New York, weighing on Japan’s exporters.

    “Expectations were too high that oil output would be frozen,” Yoshinori Ogawa, a market strategist at Okasan Securities, told Bloomberg News. “As we shed those expectations, it becomes easier for a risk-off mood to kick in.”

    The glum news compounded the effects of last week’s two earthquakes that struck southern Kyushu island early Friday and Saturday.

    Toyota on Sunday announced the gradual suspension of assembly lines nationwide, citing problems with parts suppliers in the area.

    Toyota plunged 5.06 percent to 5,449 yen by the break, while Honda, which said its motorcycle plant in Kumamoto will also remain shut until Friday, tumbled 4.49 percent to 2,898.5 yen.

    However, analysts said the impact on automakers’ bottom line should be relatively limited owing to lessons learned after the 2011 quake-tsunami disaster, even if operations are shuttered for several weeks.

    “Automakers and their suppliers have together built up strong procurement networks for components that can be rapidly restored following disasters,” brokerage house Nomura said.

    Sony, which said on Monday it kept its area semiconductor manufacturing facility offline, slumped 5.43 percent to 2,775.5 yen.

    Kyushu Electric, which operates Japan’s only two operating reactors, both on the island on which the quakes struck, dropped 7.27 percent to 1,096 yen, as the disaster aggravated safety concerns. AFP

    AFP/BF

    Share.
    loading...
    Loading...

    Please follow our commenting guidelines.

    Comments are closed.