Tokyo Stocks Plunge, Dollar Edges Higher
TOKYO (AP) _ The Tokyo Stock Exchange’s leading index suffered its biggest drop in more than five months today, closing at its lowest point since February. The dollar edged up against the Japanese yen.
A government report of unusually high economic growth in the January-March quarter led to pessimism about prospects for lower domestic interest rates, traders said.
The Nikkei Stock Average of 225 selected issues plunged 688.72 points, or 2.79 percent, its biggest fall since 770.53 points on Jan. 16. Its closing of 23,996.75 was its lowest since 23,952.04 on Feb. 6.
On Tuesday, the index fell 257.62 points.
Today’s trading was moderate, totaling an estimated 320 million shares on the exchange’s first section, up from 265 million on Tuesday.
The market today ″went to 24,000 just like that. It was quite a surprise to most people,″ said Amy Yip, manager of sales for Baring Securities.
A government report Tuesday that Japan’s economy was growing at an annual rate of 11.2 percent in the January-March quarter, the highest in 18 years, sent the market into a tailspin in morning trading, traders said.
Reports that a gangster group had bought stocks of a leading electronics retail chain along with selling by investment trusts also helped turn market sentiment ″very, very bearish,″ said Hiroyasu Matsumura, a securities salesman for Wako Securities.
Yip also cited ″information that the total arbitrage outstanding over September futures″ was worth $7.09 billion, which would be difficult for the market to absorb if trading volumes stay low.
The dollar closed at 141.10 yen, up 0.04 yen from Tuesday’s close of 141.06 yen. It opened at 141.08 yen, unchanged from its overnight close in New York, and ranged between 140.85 yen and 141.13 yen.
Spot trading totaled $6.21 billion, up from $5.44 billion on Tuesday.
Matthew Berlow, economist at Credit Lyonnais Securities, said the dollar remains high against the yen because the United States is moving into a recovery while Japan’s economy is easing into a ″soft landing″ slowdown.
There was more interest in mark trading than in the dollar-yen exchange, said Minori Takeuchi, a dealer at Chemical Bank.
The market ″went crazy″ with short-covering, she said, when remarks by German central bank president Karl Otto Poehl in New York led some traders to fear coordinated intervention was being readied to support the mark.
Poehl said he wished the market would ″evaluate a little more positively judgments about the Deutsche mark.″
Bond traders said the stock market’s fall pushed the price of the benchmark No. 129 10-year Japanese government bonds down to 97.28 points at the close from Tuesday’s 97.40-point finish. Their yield rose to 6.900 percent from 6.875 percent.