Stocks Plunge Again, Dollar Strengthens
TOKYO (AP) _ The Tokyo Stock Exchange fell sharply today to its lowest level in nearly 22 months as uncertainties over the Iraqi invasion of Kuwait grew. The dollar strengthened against the Japanese yen.
The dollar closed at 150.60 yen, up 1.10 yen from Monday’s 149.50 finish. The currency opened at 150.75 yen and ranged between 150.48 and 151.10.
The 225-share Nikkei Stock Average lost 946.46 points, or 3.31 percent, ending the day at 27,653.07, the lowest level since Oct. 26, 1988, when the index fell to 27,620.60.
Since Iraq invaded Kuwait on Thursday, the index has lost 3,184.92 points, or 11.5 percent. First section volume today was thin, estimated at 500 million shares, up from Monday’s 330 million.
On an active day, more than 1 billion shares are traded.
The index ended the morning session with a 1,327-point decline before bargain-hunting helped regain some of the loss in the afternoon, according to traders who spoke on condition of anonymity.
They said the Nikkei’s decline was caused by growing fears among investors of Middle East developments, surging oil prices, plunging government bond prices and the weakening yen.
Oil prices continued moving up in Asia, with October Brent valued at $27.80 to $28.00 a barrel at around 3 p.m.
It sold at $27.05 at the beginning of the day.
Meanwhile, the price of the benchmark No. 119 10-year Japanese government bonds closed at 82.98 points, down from Monday’s 83.71-point finish. The yield finished at 8.105 percent, up from 7.935 percent.
″Market players were increasingly getting pessimistic, and they were almost panicking,″ said Kazuhiro Nomura, a trader with New Japan Securities Co.
There were plenty of sellers today but buyers stayed out of the market, analysts said.
″Unless they figure out the extent of its effect, investors are inclined to stay away from the stock market,″ Nomura said.
The Japanese government has imposed a set of sanctions against Iraq for invading Kuwait, including a ban on oil imports from Iraq and Kuwait and on all Japanese exports to the two nations.
Japan relies on imports for 99 percent of its oil needs and has never previously banned the import of petroleum.
While top officials acknowledge the sanctions will affect daily life, they point out that the nation’s petroleum reserves, which are estimated to last for 142 days, should cushion the impact.
Prime Minister Toshiki Kaifu will ask other oil-producing Arab countries later this month to expand their crude oil production if the embargo is prolonged.
In currency dealings, soaring oil prices and further declines in stock and bond markets added to the currency market’s bearish sentiment toward the yen, although there was a slight recovery of stability, dealers said.
They said some market players sold the U.S. currency to take profits from its strong overnight increase in New York.
″Uncertainty about the Middle East is a factor that encourages dollar buying, but on the other hand, pessimistic prospects over the U.S. economy, which is a dollar-selling factor, is equally strong,″ said Takashi Fujii, a trader with the Bank of Tokyo.
″Right now, investors are watching both factors - the Middle East situation and the U.S. economy - and the currency could move in either direction, ″ he said.
Finance Minister Hashimoto said earlier today that the yen will strengthen in the aftermath of the Middle East crisis.