News Analysis: U.S. travel ban, yen's surge send Japan's Nikkei plummeting

Source: Xinhua| 2020-03-12 19:19:26|Editor: xuxin
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TOKYO, March 12 (Xinhua) -- Tokyo stocks tanked Thursday following the World Health Organization (WHO) designating the COVID-19 outbreak as a global pandemic, with the United States imposing a sweeping travel ban from mainland Europe on virus fears propelling the equities rout.

The 225-issue Nikkei Stock Average tumbled 856.43 points, or 4.41 percent, from Wednesday to close the day at 18,559.63, marking its lowest closing level since April 20, 2017.

The broader Topix index of all First Section issues on the Tokyo Stock Exchange, meanwhile, plummeted 57.24 points, or 4.13 percent, to close at 1,327.88.

U.S. President Donald Trump announcing that Washington will ban the entry of foreign travelers from mainland Europe for a period of 30 days from Friday rattled global markets and contributed to an ongoing rout here, local brokers said.

The move sent the Nikkei plummeting more than 1,000 points at one point and the safe-haven yen surging against the U.S. dollar.

"The travel ban means business activities between the two regions will become difficult," Norihiro Fujito, senior investment strategist at Mitsubishi UFJ Morgan Stanley Securities Co., was quoted as saying.

"But Tokyo shares drew some support as expectations grew for the BOJ's further easing measures to support the economy after the BOJ chief met with Prime Minister Shinzo Abe Thursday to discuss responses to the global market turmoil," Fujito said, adding, however, that the market remained unimpressed at planned U.S. economic stimulus measures.

The view was underscored by Hiroaki Kuramochi, chief market analyst at Capital Partners Securities Co., who said that plans to defer tax payments and implement a payroll tax relief, previously proposed by Trump, disappointed market players due to the fact that "they had already been reported and were nothing new."

Some losses were trimmed however in later trade after the Bank of Japan (BOJ) said it stood poised to unroll further easing measures as necessary and without hesitation.

Following a closed-door meeting held at the prime minister's office Thursday, Bank of Japan Governor Haruhiko Kuroda told reporters that there would be no hesitation by the central bank in taking the necessary measures to combat market volatility if and when deemed necessary.

"We will not hesitate to take appropriate measures in a timely manner whenever needed including further monetary easing," Kuroda said, reiterating remarks made earlier in the week when he said, the central bank stood ready to take action against market volatility and uncertainty "without hesitation."

"We will make every effort to provide ample liquidity and ensure the stability in financial markets through bond-purchase operations and increased buying of exchange traded funds," the BOJ chief previously told a parliamentary session.

Expectations, thus, have been raised for the central bank to unleash additional easing measure, in line with other central banks, market analysts here said, helping to take the edge of growing market jitters Thursday.

Nevertheless, the travel ban announcement saw investors switch out of riskier assets like stocks and into safe havens like the Japanese currency and government bonds, investment analysts here said.

The yen's rise against the U.S. dollar adversely affects Japan's key export sector, as exporters and others widely exposed to overseas markets tend to rely on a weaker currency to boost profits made in overseas markets as well as to enhance their overall competitiveness.

The dollar was quoted at 103.66-68 yen at 5 p.m. local time compared with 104.45-55 yen in New York and 105.01-04 yen at 5 p.m. on Wednesday in Tokyo.

The euro, meanwhile, fetched 1.1311-1313 dollars and 117.25-29 yen against 1.1264-1274 dollars and 117.86-96 yen in New York and 1.1328-1330 dollars and 118.97-119.01 yen in late Wednesday afternoon trade in Tokyo.

As well as exporters and some cyclical issues losing ground, marine transportation-linked issues took a battering Thursday, with Mitsui O.S.K. Lines sinking 8.5 percent, while Kawasaki Kisen dived 12.3 percent. Nippon Yusen, meanwhile, ended the day 7.9 percent lower.

Energy and oil stocks also lost ground on slumping prices for crude oil and Idemitsu Cosmo Energy and JXTG Holdings Inc. were among notable losers.

Financial issues advancing on rising interest rates over the past few days saw fortunes reversed on dropping rates Thursday, with megabank Mitsubishi UFJ Financial Group Inc. retreating along with insurance firm Tokio Marine Holdings Inc.

But Kurabo Industries marked a notable bright spot during trading hours, surging by its daily limit of 22.6 percent, after the chemical product maker announced it will import and sell in Japan from next week test kits developed by its Chinese business partner that can detect COVID-19 infections in 15 minutes, vastly quicker than current tests.

By the close of play, all industry categories retreated into negative territory, with mining, air transport and marine transport issues comprising those that declined the most.

Issues that declined trounced those that advanced by 2,117 to 39 on the First Section, while nine ended the day unchanged.

On the main section on Thursday, 2.583 billion shares changed hands, rising from Wednesday's volume of 1.996 billion shares.

The turnover on the penultimate trading day of the week came to 3,785.3 billion yen (36.51 billion U.S. dollars).