Nikkei, Dollar Down Slightly
TOKYO (AP) _ Share prices fell slightly today in Tokyo, dashing hopes that the market’s record recovery the day before had signaled a turnaround from a nine-month decline.
Meanwhile, the dollar closed at 136.65 yen, down 0.08 yen from Tuesday’s close of 136.73 yen. It opened at 136.33 yen and ranged between 136.21 yen and 136.70 yen.
The 225-issue Nikkei Stock Average, which gained 2,676.55 points Tuesday in its largest daily gain ever, fell 49.02 points, or 0.21 percent, ending the day at 22,849.39. Today’s trading was moderate with 600 million shares changed hands on the first section.
The market’s key index closed the morning session 331.16 points higher, but that was the end of an afterglow left by government support measures that triggered Tuesday’s surge, traders said. They said the index lost about 600 points within the first 30 minutes of afternoon trading as profit takers dumped issues.
Masahiro Umemori, an analyst with Nomura Securities Co., said Tuesday’s rise ″would not set a new trend, although expectations about easier monetary policy reassured investors.″
″I think the market has not hit bottom. It’s going to fall some more,″ he said. On Tuesday ″many investors were confused by the sudden changes in the market and were not quite sure what they should be doing.″
In the first nine months of this year, the market has lost 17,932.37 points, or 46.1 percent, from last year’s close at 38,915.87. The losses are equivalent to $2.1 trillion.
″The market will continue to seek its bottom for awhile,″ said Kazu Nomura, a trader with New Japan Securities Co. ″The market’s environment is so bad and pessimistic. Investors have no buying incentive.″
On Monday, Finance Minister Ryutaro Hashimoto announced a series of measures aimed at spurring buying and reducing market volatility. The measures include easing restrictions on stock purchases on credit and shorter hours for futures and options trading to stymie speculators. Hashimoto also mentioned the possibility of easing monetary policy temporarily.
Some analysts say an easier monetary policy for the sake of revitalizing the stock market should be only a temporary measure. Over a longer period, a looser monetary policy amid higher oil prices and the tight labor market could ignite inflation, they say.
Nikko Securities chief trader Yoshio Ogawa said the index would have risen farther if a computer breakdown had not halted 45 minutes of morning trading.
″Quick recovery only in terms of the index’s gains is no good. The market should digest both buying and selling at the same time and rise back little by little,″ Ogawa said.
Traders said rising oil prices and some positive developments in the Gulf crisis, including a recent release of some French hostages from Iraq, contributed the Nikkei’s morning increase.
The index’s afternoon plunge was fueled by large-scale selling by foreign brokerages following a false rumor about fighting in the Gulf, said Nomura of New Japan Securities.
Japan is highly vulnerable to unrest in the Gulf because it imports virtually all its oil, with 70 percent of it coming from the Middle East.
Meanwhile, an economic forecast released by the Research Institute on the National Economy, a privately funded think tank, predicted that stock market declines will inflict only minor damages on the Japanese economy.
″Losing a bubble is rather a plus to the Japanese economy in the long run,″ it said. ″A series of stock market plunges paved the way for growth with balance between actual economy and financial markets.″
On the foreign exchange, dealers said falling oil prices triggered the dollar’s slip against the yen earlier today.
Lower oil prices helped the yen gain slightly against the dollar and the European currencies early today, but rumors of fighting in the Middle East discouraged the yen buying in the afternoon session, dealers said.
They said investors avoided major moves ahead of testimony later today by U.S. Federal Reserve Chairman Alan Greenspan and Friday’s release of U.S. jobless rate.
Chemical Bank dealer Minori Takeuchi said market players were hoping to get clues of the Fed’s policy on interest rates, which have been widely expected to fall.
In bond dealings, the yield of the benchmark No. 119 10-year Japanese government bonds closed at 8.310 percent, up from Tuesday’s 8.185-percent close. Their price ended lower at 82.32 points from 82.81.
Bond dealers said a rumor, also false, that a U.S. fighter jet was shot down in the Gulf sent bond prices lower.