Nikkei Plunges 2% in Asian Markets, Oil Extends Losses

Hiruki Nakamura
16 Dec, 2014
New York City

Stocks in Tokyo and Asia declined for the second day on the dramatic turn of events in Russia. Nikkei dropped 2% and extended two-day sell-off after Russia hiked interest rate by 6.5% to ward off capital flight. Asahi Holdings Inc agreed to acquire Johnson Matthey Plc for $186 million.

[R]4:30 PM Tokyo – Stocks in Tokyo and Asia declined for the second day on the dramatic turn of events in Russia. Nikkei dropped 2% and extended two-day sell-off after Russia hiked interest rate by 6.5% to ward off capital flight. Asahi Holdings Inc agreed to acquire Johnson Matthey Plc for about 22.82 billion yen or $186 million.[/R]

Investors in Tokyo reacted to dramatic events in Russia and persistent weakness in oil price and the yen advanced after global investors dumped currencies of emerging markets.

Investors turned cautious and sold stocks after oil price correction extended to 47% and ruble plunged 13% forcing Russian government to take unprecedented steps and dramatically lift interest rate by 6.5% at mid-night Moscow time.

However, in trading today Russian ruble continued to plunge and at one point dropped as low as 80 against one dollar before recovering to 72.65.

Currencies of emerging market nations from Indonesia, Thailand, Brazil, Mexico, Turkey and India took hit on the dramatic collapse of Russian ruble.

The Markit survey showed Japan’s purchasing managers index increased to 52.1 from 52 in November, the fastest rate in three months.

The Nikkei 225 Stock Average declined 344.08 or 2% to 16,755.32 and the broader Topix index dropped 25.92 1.9% to 1,353.37.

The yen gained 0.09% to 117.87 against one dollar.

Stocks in Review

Asahi Holdings Inc decreased 1.2% to 1,717 yen after the precious metals recycler’s American subsidiary agreed to acquire Johnson Matthey Plc. the gold and silver refiner for about 22.82 billion yen or $186 million in cash.

The transaction is expected to close on or before March 31, 2015.

Fujikura Ltd soared 7.4% to 463 yen after the cable and wire maker said it will buy back as much as 4.6% or 15 million shares for as much as 9 billion yen by March 2015.

Hitachi, Ltd dropped 1.6% to 865.80 yen after the diversified company is in talks with Switzerland-based ABB Ltd to set up a joint venture to sell high voltage direct current power transmission systems in Japan where the government is moving to free up for electricity industry.

McDonald''s Holdings Co (Japan) Ltd slipped 1% to 2,685 yen after the fast-food chain said domestic customers can only order small quantity of fries mainly due to potato crises.

A labor dispute held up the shipments at U.S. West Coast ports and cut-off the country’s supply of American potatoes.

Nomura Real Estate Master Fund fell 0.5% to 155,200 yen after the real estate developer agreed to acquire Kawasaki More’s compartmentalized ownership with an acquisition price of 2.08 billion yen.