Yen rises while Tokyo’s stocks fall amongst increasing tensions in the Middle East
Japanese stock markets began on a shaky note in 2020, with stocks plummeting and the yen growing against the dollar as the Middle East’s increasing turmoil caused creditors to scramble for safe-haven properties.
The benchmark Nikkei 225 lost more than 500 points momentarily during Monday morning trade on the Tokyo Stock Exchange until closing at 23,204.86, down 451.76 points, or 1.91 per cent, from the last trading day in 2019, on Dec. 30. The wider Topix, covering all first-section issues on the TSE, ended Monday at 1.39 per cent, or 23.87 points, lower at 1.697.49 points.
The dollar slid briefly to a three-month low at the upper level of 107 yen before fluctuating around the afternoon line of 108 yen.
The Nikkei experienced the lowest close in about a month after a U.S. airstrike on Friday killed Iran’s top leader Qassem Soleimani, causing Iran to threaten revenge.
A.S. President Donald Trump said on Twitter on Sunday that “if Iran strikes any U.S. person or target, the U.S. will quickly and fully strike back, and perhaps disproportionately.” “The concern has grown that tensions between the U.S. and Iran will escalate further,” said Norihiro Fujito, senior investment analyst at Mitsubishi UFJ Morgan Stanley Securities Co.
The dollar fell to about 107.80 yen in the morning, an amount which has not been seen since early October. The firmness of the yen has fueled fears regarding Japanese corporate profits, analysts have said.
Certain safe-haven investments were also in demand, including gold and debt. Gold futures soared to a record high on the Tokyo Commodity Exchange, and the yield on Japan’s 10-year benchmark government debt continued to fall into negative territory.
Worries over strains between the U.S. and Iran have raised oil prices in Japan, with crude oil futures in the Middle East spiking to a commodity exchange peak of seven months.
Declining issues outnumbered advancers 1,835 to 277 on the first section, while 49 ended unchanged. Decliners involved issues related to sea trade, rail facilities, and air transport.
Marine transportation issues struck after worries about increased conflicts between the U.S. and Iran moved crude oil prices upward.
Mitsui OSK Lines Ltd. tumbled to 2.898 yen at 127 dollars or 4.2 per cent. Kawasaki Kisen Kaisha Ltd. plummeted to 1787 dollars, or 4.1 per cent, while Nippon Yusen K.K. 57 dollars fell, or 2.9 per cent, to 1,924 yen.
Oil refiners and explorers, on the other side, attracted purchasing on expectations that higher fuel prices will increase their profits. Inpex Corp. jumped to 1,183 cents (46.50 yen), or 4.1 per cent. JXTG Holdings Inc. leapt 17 yen or 3.4 per cent to 514.90 yen, and Idemitsu Kosan Co. jumped 75 yen or 2.5 per cent to 3.105 yen.
Automakers have suffered because of the heavier yen. Honda Motor Co. fell 92 or 3.0% to 3.007 dollars, Mazda Motor Corp. plummeted 23 yen or 2.5% to 915 yen, and Toyota Motor Corp. dropped 149 yen or 1.9% to 7.565 yen.
Nissan Motor Co. dropped 10.60 million, or 1.67 per cent, to 625.50 yen after former Chairman Carlos Ghosn jumped bail in Japan late last month and escaped to Lebanon.
Including Australia, shares even dropped in most other Asian markets. Asian economies are heavily dependent on Middle East oil, and the price of oil has increased.
Following a rumour that Chinese officials expect to tour Washington next week to ink a trade deal with Trump, the Shanghai Composite index gave up early gains.