Stocks Tumble, Dollar Lower
TOKYO (AP) _ Stock prices took the largest drop of the year Tuesday on the Tokyo Stock Exchange and the dollar also dropped sharply against the Japanese yen.
The Nikkei Stock Average of 225 selected issues, which lost 251.67 points Monday, took another major drop of 513.09 points, or 1.89 percent Tuesday, closing at 27,149.03.
It was the largest one-day decline of the index since December 26, 1987, when the index fell 587.50 points.
In the foreign exchange market, the U.S. currency, a 1.75 yen winner Monday, closed at 133.85 yen, down 1.30 yen from Monday’s close.
After opening at 134.30 yen, the currency moved in a range of 133.70-134.38 yen.
The last time the Nikkei average posted such a sharp drop was on Dec. 26, when it had a 587.50-point decline for the entire session.
Stock brokers attributed the sharp decline in the key market barometer to drops in steel shares following an overnight fall in New York.
They also noted that oil prices rose sharply in overseas markets because Iran’s announcement that it would accept a United Nation’s call for a cease- fire in its nearly 8-year-old war with Iraq.
″Steel shares which had been propping up the market could not hold their position any more and finally went down today (Tuesday) and that put the entire market on a decline,″ said Kiichi Nishida of Kidder Peabody in Tokyo. ″But shares directly related to the Gulf situation have not moved too much so far.″
Another broker at a major Japanese securities firm said the market has entered a transitional period.
″On today’s (Tuesday) market, a 500-point drop is within the range of adjustment,″ he said, speaking on condition of anonymity. ″From here, investors will find other shares which they can depend on in place of steel shares. Heavy electronic shares are likely to be a new target.″
On the foreign exchange market, the dollar opened lower and continued declining against the yen throughout the morning session. The dollar, which was up by 1.75 yen on Monday, opened at 134.69 yen, down from Monday’s 135.15 yen, and traded mainly in the 133.95 yen to 134.38 yen range during the morning session.
Currency dealers said the dollar declined mainly because of early morning speculation on whether the Bank of Japan would intervene in the market and sell dollars.
″The speculation lead to a one-sided selling of the dollar,″ said a exchange dealer at a major U.S. bank in Tokyo, speaking on condition of anonymity. ″And the situation in New York also helped the dollar go down further.″