Fed and China Worries Drag Nikkei and Asian Markets

Hiruki Nakamura
20 Jun, 2013
New York City

Stocks in Tokyo declined following an Asia-wide sell-off after comments from Fed Chairman Bernanke stoked the fears of early stimulus withdrawal in the U.S. The yen eased 1% against the dollar and 10-year Japanese bond yield increased 3 basis points to 0.85%.

[R]5:10 PM Tokyo – Stocks in Tokyo declined following an Asia-wide sell-off after comments from Fed Chairman Bernanke stoked the fears of early stimulus withdrawal in the U.S. The yen eased 1% against the dollar and 10-year Japanese bond yield increased 3 basis points to 0.85%.[/R]

Stocks in Tokyo resumed its downward moves after investors feared earlier-than-expected withdrawal of stimulus in the U.S.

Fed Chairman Bernanke hinted that the Fed may reduce its bond purchase later in the year and end them by mid-2014. The announcement came as a surprise to many investors and most economists fear that the economy is not strong enough to grow without the Fed’s support.

In addition, a private survey conducted by HSBC indicated its China purchasing managers index declined to 48.3 in June from 49.2 in May.

A value below 50 indicates declining activities. The index declined to the lowest in the last nine months.

The Nikkei 225 Stock Average declined 230.64 or 1.7% to 13,014.58 and Topix index slumped 14.76 to 1,091.81.

The yen strengthened to 97.41 against one dollar in today’s trading and the currency is still below its 4-year peak of 103.73 on May 22.

Stocks in Review

Toyota Motor Corp slipped 60 yen to 5,810 yen and Honda Motor Co. dropped 55 yen to 3,510 yen and Nissan Motor Co Ltd slid 10 yen to 1,010 yen.

Sony fell 2 yen to 2,013 yen. Canon Inc fell 35 yen to 3,215 yen and Nikon plummeted 143 yen or 5.8% to 2,327 yen.

Sony slid 0.1% after the chief executive Kazuo Hirai said we need some more time to study the proposal from U.S. hedge fund to spin-off its entertainment unit.

Fanuc Corp declined 470 yen to 14,200 yen and Softbank Corp closed unchanged at 5,460 yen.

Seven & I Holdings Co slumped 95 yen to 3,405 yen. Fast Retailing Co. slid 680 to 29,620 yen.

Mitsubishi UFJ Financial Group declined 11 yen to 582 yen and Sumitomo Mitsui Financial Group gained 30 yen to 4,270 yen.

Japan Airlines Co., Ltd. gained 80 yen or 1.6% to 5,220 yen after the aviation company is in talks with Boeing for losses stemming from the grounding of its troubled 787 Dreamliner.

Skymark Airlines Inc. slid 0.3% to 325 yen after the airline company intends to buy four of Boeing’s 737 MAX planes, to be the first Japanese airline to choose mid-range plane.