Tokyo stocks close down on yen surge
AFP
AFP, TOKYO: Tokyo stocks closed lower yesterday as the yen shot to five-month highs against the dollar over fears about growing tensions in the Middle East and on the Korean peninsula.
Traders were subdued as they watched developments following last weeks US strike on Syria and intensifying sabre-rattling by the United States and North Korea.
Nervous investors often plough into the yen at times of instability as it is seen as a safe haven.
The dollar was trading below 110 yen for the first time since November, changing hands at 109.52 yen on Wednesday against 109.65 yen in New York on Tuesday afternoon and 110.66 yen in Tokyo earlier.
A strong yen is negative for Japanese exporters as it erodes their profitability and often drags the stock market lower.
It is possible that the yen will remain strong for a while due to rising geopolitical risks, which would dampen appetite for dip buying, Okasan Online Securities said in a commentary.
The stronger yen is having a negative effect across the board in Tokyo stock trading, it said.
The benchmark Nikkei 225 index lost 1.04 percent, or 195.26 points, to close at 18,552.61, while the Topix index of all first-section issues fell 1.04 percent, or 15.56 points, to 1,479.54.
On Tuesday, US President Donald Trump warned that Washington was prepared to solve the problem of North Korea on its own if necessary as he and Pyongyang engaged in tit-for-tat comments that sent tensions soaring.
Trumps warning came as a US naval strike group headed towards the Korean peninsula, a show of force that prompted the nuclear-armed North to declare it was ready to react to any mode of war desired by the US.
On Syria, US Secretary of State Rex Tillerson flew to Moscow on Tuesday to confront the Kremlin about its support for the government of Bashar al-Assad, amid US statements that Russia tried to cover up a chemical attack.
Tokyo stocks were down across the board, with mega bank MUFG falling 1.49 percent to 663.7 yen.
Exporters declined, with Panasonic dropping 1.61 percent to 1,245.5 yen and Toyota trading down 1.89 percent at 5,798 yen.
Struggling Japanese industrial giant Toshiba fell 1.02 percent to 221.2 yen after it reported an unaudited loss of $4.8 billion in long-overdue financial results for the nine months to December 2016.
Toshibas troubles revolve around huge writedowns at its US nuclear unit Westinghouse Electric, which filed for bankruptcy protection last month.
In announcing the earnings, Toshiba also warned of the likelihood of a worsening financial situation and said its survival was at risk.
