Tokyo
stocks slumped Wednesday, with the
Nikkei index down over 3 percent, as a sharp drop in crude oil futures added to fears of a global economic slowdown.
The 225-issue Nikkei Stock Average ended down 559.43 points, or 3.15 percent, from Tuesday at 17,191.25. The broader Topix index of all First Section issues on the Tokyo Stock Exchange finished 45.77 points, or 3.15 percent, lower at 1,406.27.
Decliners were led by equities, iron and steel, and machinery issues.
Tokyo
stocks retreated sharply from the start of trading, with the
Nikkei index briefly shedding more than 600 points.
"Equities have been tracking the movement of crude prices this year. Crumbling oil prices are fueling the heavy sell-off in
Tokyo
stocks," said
Akira Tanoue of
Nomura Securities Co.'s investment research and investor services department.
"Sliding oil prices are now being interpreted as a sign of the cooling global economy," Tanoue added.
U.S.
stocks skidded overnight on the resumed fall in oil prices as hopes for a joint production cut by
Russia
and members of the
Organization of Petroleum Exporting Countries receded.
Iran's
return to the market after the lifting of economic sanctions also heightened expectations that the oil supply glut could worsen.
Crude futures prices fell below the $30 line for the first time in roughly two weeks in
New York
on Tuesday to
$29.88 per barrel.
Hiroaki Hiwada, strategist at Toyo Securities Co., said the hefty losses erased the strong rally staged after the Bank of Japan announced last week it will adopt a negative interest rate. While the post-BOJ rally has faded, there are still hopes in the market that fresh BOJ stimulus could lift
Japan's
economy, Hiwada said. "But with crude prices sinking, the market will continue to be volatile for a while."
Hiwada added that along with collapsing oil prices, a raft of disappointing earnings reports released earlier in the week also dented investor sentiment.
The
U.S.
dollar's drop to the upper
119 yen zone also weighed on
Tokyo
stocks, sapping export-related issues.
On the First Section, declining issues trounced advancing issues 1,735 to 164, while 36 ended the day unchanged.
IHI slumped 50 yen, or 20.2 percent, to 197 yen after the heavy machinery manufacturer forecast on Tuesday a net loss for the business year through March, citing additional costs following construction delays.
Mitsubishi dived 130.50 yen, or 6.9 percent, to 1,763.00 yen after the major trading company reported Tuesday a 24 percent year-on-year decline in net profit for the April-December period.
Nintendo dropped 290 yen, or 1.7 percent, to 16,885 yen after the video game hardware and software company reported a 32 percent year-on-year decline in its net profit for the nine months through December.
Resource-related names plunged as oil prices continued to slide with Cosmo Energy Holdings dropping 15 yen, or 1.2 percent, to 1,253 yen.
The yen's rise against the dollar dragged down export-oriented issues with Honda Motor diving 200 yen, or 5.9 percent, to 3,189 yen.
Trading volume on the main section rose to 3,103.82 million shares from Tuesday's 2,771.48 million shares.
==Kyodo
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