The Tokyo Stock Exchange plunged Wednesday morning in the wake of Wall Street, weighed down by the strength of the yen and renewed investor concern about the global economy, while Chinese stock markets fell in tandem. The leading Nikkei index lost 3.71% to 37,250.95 points around 0105 GMT, and the broader Topix index dropped 3.10% to 2,648.66 points. Japanese markets are shaken by “the weakness of American stocks the day before and by the liveliness” of the yen, commented analyst Toshiyuki Kanayama of Monex.
The New York Stock Exchange had closed sharply lower the previous day, shaken by renewed investor concern about the health of the global economy. September is traditionally a weak month for stocks, however “It is not just a question of the calendar being stripped down, but also of the reaction of investors to a publication that is far from reassuring” on activity in the manufacturing sector in the United States, analyzed Stephen Innes of SPI Asset Management. Already last month, fears about economic growth that had panicked the markets “were fueled by a weak employment gauge in the July manufacturing report”he recalled. Wall Street, where the VIX index – said “fear index” – measuring investor excitement soared by 33% on Tuesday, had also been marked by profit-taking and the fall in values linked to semiconductors, with champion Nvidia in the lead.
Semiconductors in decline
In Tokyo, the sector’s shares were the first victims of this tension, with Advantest falling by 9.60% and Tokyo Electron by 7.47%.
In Hong Kong, the Hang Seng index fell 1.48 percent to 17,390.24 points in early trading. At the same time, the Shanghai Composite Index fell 0.53 percent to 2,788.06 points and the Shenzhen Composite Index lost 0.41 percent to 1,524.40 points.
On the foreign exchange market, the yen stabilized on Wednesday after experiencing a significant rise the day before, particularly against the dollar, after the speech by the governor of the Bank of Japan (BoJ) who reiterated that the institution would raise its rates if the economy evolved in line with its expectations. “Ongoing conflicts, trade tensions and potential economic slowdowns in key regions could lead to increased demand for dollars amid global risk aversion.”commented Charu Chanana, currency strategist at Saxo Capital Markets.
The dollar was down to 145.18 yen by 0100 GMT from 145.48 yen at 2100 GMT on Tuesday. The euro was also down to 160.44 yen from 160.66 yen the day before, and was trading at 1.1049 dollars from 1.1043 dollars on Tuesday.
Oil prices stabilized on Wednesday after falling to an eight-month low the previous day, with traders worried about a fundamental imbalance between lackluster demand and potentially rising supply. U.S. WTI crude was down 0.51% at $69.99 a barrel, while North Sea Brent crude was down 0.46% at $73.41 by 0100 GMT.
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