5:30 PM Tokyo – Nikkei index in Tokyo plunged 7% on the growing worries about early withdrawal of the economic stimulus in the U.S. and manufacturing contraction in China. The sharp decline comes after the Nikkei soared more than 70% in seven months and markets increasing reliance on the central bank support.
Market indexes plunged in Tokyo after the latest Chinese survey indicated manufacturing industry growth contracted and U.S. Federal Reserve comments raised the specter of stimulus unwinding.
The yen edged higher to 101.69 against one dollar and the yen as investors pulled back and the market indexes and the currency reversed the course after the recent multi-year highs.
The Nikkei 225 Stock Average tumbled 1,143.28 or 7.3% to 14,483.98 and the broader Topix Index declined 87.69 or 6.9% to 1,188.34.
Shinkin Asset Management Co said “There is a lot of profit-taking going on. When volatility is high, investors want to take off risk.”
Every member of the Nikkei index declined for the first time since the aftermath of earthquake and tsunami in 2011.
The latest Chinese manufacturing survey conducted by HSBC showed that the sector shrank for the first time in seven months.
The Purchasing Managers Index declined to 49.6 in May, the first decline since October, and a reading below 50 indicates shrinking sector.
Stocks in Review
Toyota Motor Corp plunged 340 yen or 5.1% to 6,290 yen and Honda Motor Co. dropped 220 yen or 5.2% to 4,030 yen and Nissan Motor Co Ltd slumped 47 yen to 1,168 yen.
Mitsubishi Motors Corp tumbled 25 yen or 13.7% to 158 yen.
Sony declined 131 yen or 5.7% to 2,159. Canon Inc slipped 150 yen to 3,735 yen and Nikon plummeted 143 yen or 5% to 2,723 yen.
Fanuc Corp. tumbled 870 yen or 5.2% to 15,770 yen Softbank Corp plunged 410 yen or 7.2% to 5,320 yen.
Seven & I Holdings Co dropped 305 yen or 7.9% to 3,540 yen. Fast Retailing Co. plummeted 3,300 yen or 8% to 38,100 yen.
Mitsubishi UFJ Financial Group tumbled 65 yen or 9.3% to 634 yen and Sumitomo Mitsui Financial Group plunged 365 yen or 7.8% to 4,300 yen.
Nomura Holdings, Inc. plummeted 78 yen or 8.2% to 878 yen after the Japan based investment bank plans to increase fixed-income sales staff in Asia, U.S. and Europe and reduce inventory.
Tokyo Electric Power Company, Inc plunged 98 yen or 13.3% to 639 yen.