Tokyo stocks dive more than 5% on fears over U.S. economy

TOKYO, Japan (UPDATED) – Tokyo’s benchmark Nikkei 225 index dived more than 5% in morning trade Tuesday, December 25, amid rising doubts about the US economy and fears sparked by a US government funding crisis.

The Nikkei index dropped to as low as 19,149.34, down 5.04% or 1,016.85 points.

The broader Topix index was down 4.20% or 62.44 points at 1,425.75.

“Japanese stock markets will be volatile following a drop in US shares, with the Nikkei 225 index dipping below the 20,000 level for the first time since September 2017,” Okasan Online Securities said in a commentary.

A higher yen against the dollar is also weighing on the market, analysts said.

The dollar fetched 110.25 yen in early Asian trade, down from 110.43 yen in New York on Monday and from 111.38 yen in Asian trade on Friday, December 21.

The Tokyo market was closed on Monday, December 24, for a national holiday.

In New York, US shares fell sharply with investors unnerved by weekend reports that US President Donald Trump has asked about the possibility of firing Federal Reserve Chairman Jerome Powell.

The dive also came after Treasury Secretary Steven Mnuchin’s efforts to reassure investors fell flat.

Mnuchin was widely panned by market watchers over a phone call with the 6 biggest US banks, reporting on Twitter that the 6 CEOs have “ample liquidity” available.

The move “prompted worries in the market,” Toshiyuki Kanayama, senior market analyst at Monex, said in a note.

In Tokyo, shares were sold across the board.

Major banks dropped sharply, with Mitsubishi UFJ down 4.00% at 520.4 yen, Sumitomo Mitsui Financial down 4.19% at 351.5 yen and Mizuho Financial down 4.27% at 163.5 yen.

Carmakers were also losers, with Toyota down 4.09% at 6,153 yen, Honda down 3.66% at 2,814.5 yen and Nissan down 4.15% at 846.2 yen. – Rappler.com