Tokyo stocks fell 3.6 percent to a 16-month closing low on Tuesday, with disheartened investors bailing out of the market after the Bank of Japan's emergency moves the day before failed to curb the yen's strength. The Nikkei booked its biggest daily percentage fall since early June, and it slid 7.5 percent this month, its worst month since May. The Nikkei is one of the worst performers among major indexes in the world this year.
Disappointment set in after the BoJ expanded its fund supply tool, widely seen as an ineffective move, while the government's promise to use reserve funds for jobs and deregulation also failed to impress. And with the US economic recovery under a cloud, market players note there is little Japan alone can do for its economy and stock market.
He added that investors are also selling ahead of US economic indicators this week, including jobs data, on worries that weak data would prompt selling of the dollar and that the Nikkei had sunk so far that individual investors were joining foreigners in fleeing the market.
The benchmark Nikkei shed 325.20 points to 8,824.06, its lowest finish since April 28, while the broader Topix lost 3 percent to 804.67. The dollar slipped 0.6 percent against the yen to 84.10 yen, within sight of last week's 15-year low of 83.58 yen. US stocks fell in the year's lightest volume on Monday as worries about the pace of recovery overshadowed a rise in consumer spending and incomes.
Market players said the Nikkei could test the 8,800, around a 16-month low hit last week, at some point this week although some light buying by pension funds was likely and may offer support at the lows. Below 8,800, the next target is 8,697, a 61.8 percent retracement of the Nikkei's rally from its March 2009 low to its April 2010 high.
The Nikkei joins Chinese stocks in being among the worst of major stock indexes. The Shanghai Composite Index has shed about 19 percent this year, while the Nikkei has lost around 16 percent and the Dow Jones industrial average is 4 percent lower. Among sectors worst-hit this year are high-tech shares, vulnerable both to a strong yen and economic chills. The precision machinery subindex hast lost about 20 percent.
Exporters took a beating on Tuesday. Canon Inc dropped 4.5 percent to 3,425 yen and Kyocera Corp slid 4 percent to 7,140 yen. Sony Corp lost 3.7 percent to 2,368 yen. PC memory maker Elpida Memory Inc tumbled 7.3 percent to 1,009 yen as prices of DRAM (dynamic random access memory) chips continue to drop on a sluggish outlook for PC demand.
The Nikkei business daily reported on Tuesday DRAM prices in the second half of August were about 2 percent lower than the prices in the first half. Chip-tester maker Advantest Corp lost 5.3 percent to 1,594 yen and Tokyo Electron shed 5.7 percent to 3,940 yen. Some 1.6 billion shares changed hands on the Tokyo exchange's first section. Declining shares outnumbered advancing ones by nearly 32 to 1.