TOKYO (April 28): Benchmark Tokyo rubber futures plunged to a one-week low on Thursday as the yen’s surge and tumbling stock prices prompted a flurry of profit-taking after the Bank of Japan opted out of any further moves to ease policy.
“A sharp selloff in Nikkei and a spike in yen led investors to quickly take profits and unwind their long positions,” said Toshitaka Tazawa, analyst at Fujitomi Co.
The Tokyo Commodity Exchange (TOCOM) rubber contract for October delivery <0#2JRU:> finished 6.1 yen, or 3.0%, lower at 194.8 yen (US$1.80) per kg, the lowest close since April 20.
Japan’s ‘Golden Week’ public holidays kick off on Friday, with markets also to remain closed on May 3, 4 and 5.
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TOCOM futures, which set the tone for tyre rubber prices in Southeast Asia, fell 1.9% for the week, marking the first drop in five weeks.
A lack of fresh stimulus from the BOJ sent the yen soaring and world stocks into the red on Thursday, half a day after the U.S. Federal Reserve signalled it too was hitting the policy pause button.
The yen surged almost 3% against the euro and dollar, in stark contrast to a handful of media reports which had driven the Japanese currency lower in the past week. A weaker yen makes yen-denominated assets more affordable when purchased in other currencies.
Japanese stocks gave up early gains and took a u-turn that wiped out much of the previous week’s four-day rally in a single afternoon.
“Although physical prices in producing countries remained firm, weakening Shanghai futures also dampened market sentiment,” Tazawa said.
The most-active rubber contract on the Shanghai futures exchange for September delivery fell 290 yuan to finish at 12,710 yuan (US$1,961.78) per tonne.
The front-month rubber contract on Singapore’s SICOM exchange for May delivery last traded at 151.0 U.S. cents per kg, down 4.8 cent.
(US$1 = 108.1400 yen)
(US$1 = 6.4788 Chinese yuan renminbi)
