Nikkei Average Plunges to Five-Year Low, Dollar Declines
TOKYO (AP) _ The Tokyo Stock Exchange’s main barometer plunged to its lowest level in more than 5 1/2 years today amid pessimism about the economy. The dollar fell against the Japanese yen.
The 225-issue Nikkei Stock Average shed 507.73 points, or 2.99 percent, closing at 16,445.80 points. On Tuesday, the average had gained 0.30 points after falling a total of 891.81 points in the previous four trading days.
Today’s close was the Nikkei’s lowest since 16,397.83 on Oct. 28, 1986. The average’s previous lowest finish this year was 16,598.15 on April 9.
An estimated 280 million shares changed hands, up from Tuesday’s 230 million. Declining issues outnumbered advances 908 to 83, with 105 issues unchanged.
The Tokyo Stock Price Index of all issues listed on the first section, which rose 1.74 points, or 0.13 percent, on Tuesday, lost 30.60 points, or 2.34 percent, to 1,276.61.
″It’s pretty depressing,″ said Ed Strover, manager of international equity sales with Schroder Securities in Tokyo.
Yoshiro Inoue, an analyst with Nomura Securities, said pessimism about the economy and corporate prospects pushed the main index lower, and arbitrage selling accelerated the decline.
In arbitrage selling, investors seek profits from price differentials between the spot and futures markets.
″People were disappointed by the government’s failure to respond to the weakening economy, confirmed in last Friday’s quarterly report,″ Inoue said.
The Bank of Japan reported Friday that its latest quarterly survey showed Japanese manufacturers pessimistic about business prospects.
Since then, investors had expected the central bank to allow short-term interest rates to move lower, Inoue said.
But in a regular news conference today, Bank of Japan Governor Yasushi Mieno said there had been no change in the central bank’s monetary policy since the release of the quarterly survey.
He said the economy has not strayed from the desirable path toward well- balanced, non-inflationary growth.
Meanwhile, the dollar closed at 126.60 yen, down 0.40 yen from Tuesday’s finish but higher than its overnight New York close of 126.50 yen.
After opening at 126.26 yen, it ranged between 126.22 yen and 126.62 yen. Spot trading totaled $5.91 billion, up from Tuesday’s $5.07 billion.
Kiyoshi Mizutani, a dealer at the Tokai Bank, said, however, that ″falling share prices on the Tokyo stock market are making traders reluctant to buy yen.″
The benchmark No. 129 10-year Japanese government bonds closed at 105.33 points, up from Tuesday’s 104.89-point finish. Their yield fell to 5.405 percent from 5.480 percent.