Nikkei in Tokyo Drops 3.7%; Yen Floats Near Lows

Nigel Thomas
05 Aug, 2011
New York City

Stocks in Japan plunged after struggling for two weeks and closed down 3.7% on Friday, declined 5.4% in the week and dropped 9% in the year. The rising prospects of the U.S. sliding in recession and Europe

[R]4:30 PM Tokyo – Stocks in Japan plunged after struggling for two weeks and closed down 3.7% on Friday, declined 5.4% in the week and dropped 9% in the year. The rising prospects of the U.S. sliding in recession and Europe’s inability to tackle debt stress also contributed to the market jitters. The indexes are still above March 15 lows.[/R]

Stocks in Tokyo trading plunged 3% at the opening and after thirty minutes of trading recovered 1% and traded flat for several hours before making another attempt to rally and closed near the low for the day.

World markets plunged on fragile confidence and rising list of worries rooted in the U.S. economic weakness and the growing uncertainties in the euro-zone debt market.

Market indexes in Italy, Spain and Switzerland have entered in a bear market and in Germany, France and UK are in severe correction with losses between 12% and 16% since February.

World markets have been on an accelerated slide since July 22 after the bond yields for Italy and Spain began to rise and flirt above 6% level sparking deep fears that the contagion is spreading to larger nations in Europe.

Market indexes in Italy, Spain and Switzerland are down more than 20% since the peaks in February. For the year, the index in France is down 12%, in Germany 9.2% and in the UK 11%. Italian index has plunged 26% from its peak in February and down 21% in the year.

In addition, the willingness of the Republican Party controlled U.S. House to hold the U.S. economy to hostage to meet their political objectives also put bond market on the alert. The U.S. is battling economic, financial, housing market and jobs crisis after excessive spending and costly wars in the Middle East.

The latest sell-off in New York was sparked after a string of weak economic reports in the manufacturing industry, jobs markets and persistent weakness in the housing market.

The yen rose as high as 78.43 from 79.41 in volatile trading and traded against one euro at 110.71 from 113.29 at yesterday’s close.

The Nikkei 225 Stock Average plunged 3.7% to 9,305.04 and the broader Topix index fell 3.3% to 809.32.

For the week, Nikkei declined 5.4% and for the year the index is 9% lower. The index has plunged 15% from its peak on February 21 of 10,857.33 but still above its March 15 level of 8,605.

Trading volume surged to 2.5 billion stocks above the last week average of 1.7 billion shares and 69 stocks closed higher and 1,576 declined. Only eight of the 225 stocks in the Nikkei index gained.

Stock Movers

Financials and brokers were among the hardest hits in trading today on the worries that the rising prospects of sovereign debt in the euro-zone may generate losses.

Nomura Securities Group Inc decreased 3.6% to 321 yen and Nomura dropped 5.4% to 349 yen.

Trading companies declined after crude oil and base metals headed lower. Crude oil fell 6% to $86.61 a barrel in New York trading.

Mitsubishi Corp fell 2.9% to 1,932 yen and Mitsui & Co. decreased 3% to 1,349 yen. Marubeni declined 5.4% to 529 yen and Itochu Corp dropped 3.6% to 854 yen.

Energy linked stocks declined sharply after crude oil plunged in New York and London trading. Inpex Corp declined 6.8% to 533,000 yen and Japan Petroleum Exploration dropped 5.4% to 3,565 yen.