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Japan shares see biggest daily drop in 6 weeks as yen firms on Fed view

Published 11/06/2020, 08:04
Updated 11/06/2020, 08:06
© Reuters.
JP225
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TOPX
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7201
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8750
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7261
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8306
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IAIRL.T
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IMING.T
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ISHIP.T
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SYDNEY, June 11 (Reuters) - Japanese shares suffered their
biggest one-day fall in six weeks on Thursday as the safe-haven
yen strengthened after the U.S. Federal Reserve's dour economic
outlook spooked investors.
The benchmark Nikkei average .N225 plunged 2.8% to
22,472.91, its largest daily decline since May 1, moving further
away from a 3-1/2-month closing high hit earlier in the week.
"The Nikkei's recent rapid rise to the 23,000-mark was not
driven by inflows from real money investors. So when
short-covering is done, a correction was inevitable," said
Soichiro Matsumoto, chief investment officer Japan at Credit
Suisse.
Fed on Wednesday signalled that it plans years of
extraordinary support for the U.S. economy facing a
pandemic-induced recession. Fed Chair Jerome Powell said he was
"not even thinking about thinking about raising rates" and that
policy would have to be proactive with rates near zero out to
2022. This pressured rate-sensitive financial stocks. Dai-ichi
Life Holdings 8750.T tumbled 6.8%, while Mitsubishi UFJ
Financial Group (MUFG) 8306.T dropped 4.9%.
In the currency market, the risk of more easing kept the
U.S. dollar under pressure, seeing it skid to a one-month low
versus the safe-haven yen to trade at 106.90 yen JPY=EBS .
As a firmer yen hurts Japanese manufacturers' profits made
abroad when repatriated, shares of export-oriented automakers
came under pressure, with Nissan Motor 7201.T diving 8.8% and
Mazda Motor 7261.T shedding 6%.
The broader Topix .TOPX lost 2.2% to 1,588.92, also
posting its biggest one-day drop, with all but one of the 33
sector sub-indexes on the Tokyo exchange finishing lower.
Highly cyclical sea transport .ISHIP.T , air transport
.IAIRL.T and mining .IMING.T were the three worst performing
sectors on the main bourse.

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