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Tokyo shares drop as yen strengthens on Fed dour view; carmakers crash

Published 11/06/2020, 05:07
Updated 11/06/2020, 05:12
© Reuters.
JP225
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TOPX
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7201
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8750
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7267
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8306
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IMING.T
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ISHIP.T
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ISTEL.T
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SYDNEY, June 11 (Reuters) - Japanese shares dropped on
Thursday, with automakers and financials leading the declines,
as the yen firmed after the U.S. Federal Reserve made no policy
changes in the first economic projections of the pandemic era.
The benchmark Nikkei average .N225 dropped 1.1% to
22,882.28 by the midday break, further off its 3-1/2-month high
touched earlier in the week.
Fed on Wednesday signalled 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 shed 4.8%, while Mitsubishi UFJ Financial
Group (MUFG) 8306.T slid 3.9%.
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 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 tumbling 5.1%
and Honda Motor 7267.T diving as much as 4.2%.
The broader Topix .TOPX lost 0.9% to 1,610.73 by the
midday recess, also off its highest level since Feb. 21 touched
earlier this week, with all but two of the 33 sector sub-indexes
on the Tokyo exchange trading lower.
Highly cyclical sea transport .ISHIP.T , mining .IMING.T
and iron and steel .ISTEL.T were the worst three performing
sectors on the main bourse.

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