Benchmark Tokyo rubber futures sank to a 10-day low on Tuesday, as plunging global stock markets and tumbling oil prices chilled investors sentiment, prompting them to unwind their positions to reduce risk ahead of the New Year holidays. "Sliding stock prices and oil markets weighed on rubber prices, with many overseas investors away for Christmas holiday," said Satoru Yoshida, a commodity analyst with Rakuten Securities.
Japan's Nikkei retreated to a 20-month low on Tuesday after a slide on Wall Street deepened with a series of unnerving US political developments. Oil prices plunged more than 6 percent to the lowest level in more than a year on Monday, pulling back sharply late in the session as fears of an economic slowdown rattled the market.
The Tokyo Commodity Exchange (TOCOM) rubber contract for June delivery finished 2.9 yen, or 1.7 percent, lower at 170.2 yen ($1.54) per kg. The TOCOM benchmark, which sets the tone for rubber prices in Southeast Asia, hit the lowest since December 14 at 168.1 yen earlier in the session.
The dollar fell 0.39 percent to 110.00 yen, its lowest level since late August and is set to fall for an eighth straight session against the Japanese currency, with London and New York shut for Christmas. A stronger yen makes yen-denominated assets less affordable when purchased in other currencies.
"Investors are expected to square their positions later this week and ahead of the TOCOM's long holiday amid growing uncertainties over financial and commodities markets next year," Yoshida said.
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