Thursday, 10 September 2015 13:19
TOKYO: Tokyo shares dropped 2.51 percent Thursday, hit by worries about China and the impact of a possible US rate hike, a day after its biggest one-day jump in seven years.
The Nikkei 225 index at the Tokyo Stock Exchange tumbled 470.89 points to close at 18,299.62.
The broader Topix index of all first section shares fell 1.85 percent, or 27.85 points, to 1,479.52.
The Nikkei soared 7.71 percent Wednesday as investors scooped up shares on the cheap following recent losses, with optimism buoyed by hopes for more Chinese government easing and Japan’s premier reiterating a pledge to cut corporate taxes.
Toshihiko Matsuno, chief strategist at SMBC Friend Securities in Tokyo, said that investors were keen to see what further policies Beijing would usher in to boost its slowing economy and smooth volatile markets.
But “if China doesn’t come forward with new policies, investors can’t make decisive moves. It will be difficult for markets to really recover”, he added.
China’s finance ministry this week said it would accelerate major construction projects, encourage private capital to invest in key areas and cut taxes for small and medium-sized enterprises to support growth.
And on Wednesday China’s Premier Li Keqiang said the government was capable of maintaining high growth, in a bid to stem fears about the latest crisis, which has sent shockwaves through global markets.
“This is going to be a painful and treacherous process,” Li said in a speech to a World Economic Forum meeting in the northeastern city of Dalian.
“So ups and downs in economic performance are hardly avoidable”, Li added, calling that “natural” during a time of change.
“China is not a source of risk for the world economy but a source of strength for global growth.”
Also Thursday, Japan reported a 3.6 percent decline in machinery tool orders in July, the second straight decline, underscoring a slowdown in capital spending and a broader weakness in the world’s number three economy.
In share trading Sony rose 0.62 percent to 3,133 yen, while Toyota dropped 4.21 percent to 7,150 yen, and market heavyweight Fast Retailing, operator of the Uniqlo clothing chain, tumbled 5.63 percent to 46,925 yen.
Factory robotics maker Fanuc was down 0.63 percent to 20,440 yen, as weak machinery tool orders dented hopes that firms would invest more in their operations.
On currency markets, the dollar strengthened against the yen Thursday afternoon after a Japanese ruling party lawmaker told Bloomberg News that the country’s central bank should expand its monetary easing program.
The greenback rose to 120.70 yen from 120.54 yen in New York.