Monday, 06 July 2015 11:44
TOKYO: Tokyo’s benchmark stock index dropped 1.58 percent on Monday morning, the first major market to react to news that Greeks voted to reject austerity measures demanded by the cash-strapped nation’s creditors.
The Nikkei 225 at the Tokyo Stock Exchange fell 324.63 points to 20,215.16 by the break. The broader Topix index of all first-section shares was down 1.42 percent, or 23.43 points, at 1,628.66 as investors digested the vote results, which boost the odds of Greece tumbling out of the eurozone.
European leaders reacted with a mix of dismay and caution Sunday after Greek voters defied their warnings of a possible “Grexit” by saying a resounding “No” to creditors’ harsh bailout terms.
In response, jittery investors piled into the yen — a safe haven during times of turmoil — as the Sunday referendum sparked uncertainty about what happens next following months of fruitless talks between Greece and its EU-IMF creditors.
A stronger yen is a negative for Tokyo stocks as it dents the profitability of major Japanese exporters such as Sony and Toyota.
On forex markets, the dollar slipped to 122.63 yen from 123.05 yen on Friday while the euro was also lower at 135.43 yen from 136.31 yen.
But the single currency held up against the dollar, after dropping in the immediate wake of the vote. It was at $ 1.1044 in Tokyo trade, ticking up from $ 1.0963 soon after early results of the bailout reforms vote were out.
Eurozone nations will hold an emergency summit on Tuesday to discuss the result.
The Eurogroup last month rejected Greece’s appeal for an extension to its 240-billion-euro international bailout, leaving Athens unable to pay a huge International Monetary Fund bill.
The reaction from Tokyo was muted with the Japanese government and central bank saying they would “continue to work in close cooperation and carefully monitor market developments”.
“The Japanese government and the Bank of Japan remain fully prepared to deal with possible developments in Greece,” said Yoshihide Suga, the government’s top spokesman.
Japan has few economic links to Greece, but fears about the wider impact weighed on sentiment as investors look to the opening of European exchanges later in the day.
“The door to further negotiations is not shut yet and (many players) are taking a wait-and-see stance,” said Toshihiko Matsuno, senior strategist at SMBC Friend Securities in Tokyo.
“The impact of the ‘No’ vote was no bigger or even less than the shock when talks broke off between Greece and its creditors the preceding weekend.
“New problems could arise if geopolitical risks, such as Greece moving closer to Russia, grow. But it will take more time to see how things develop.”
Toshiba shares fell 2.73 percent to 411.8 yen, paring losses of more than five percent at the start, as the leading Nikkei business daily said the vast conglomerate was on track to record a bigger-than-expected 150 billion yen in losses tied to a probe of its accounting.
