Nikkei slides on stronger yen, hazy outlook for Abenomics
By Joshua Hunt
TOKYO, June 2 (Reuters) - Japanese stocks fell on Thursday morning as a stronger yen threatened to trim corporate profits while risk appetite weakened on global concerns such as the upcoming Brexit vote and domestic worries about the hazy outlook for Japan's economic and fiscal policies.
The Nikkei share average fell 2 percent to 16,619.86 by late morning.
Prime Minister Abe announced on Wednesday that he would delay a sales tax increase scheduled for April by 2-1/2 years, but rather than buoying markets the widely-expected announcement left many investors wondering about the outlook for further stimulus.
"There were extraordinary expectations that the Bank of Japan had to roll out something really big when they met in late April, but they didn't," said Stefan Worrall, director of Japan equity sales at Credit Suisse.
"Since then I think there has been a realization that policy reactions in Japan are perhaps not to be expected anymore - big, market-moving policy reactions. Once the market begins to accept this, and to lower expectations for fireworks and bazookas, we can start the process of re-calibrating Japan based on its relationship with global fundamentals."
Some market players said they viewed Abe's tax-hike delay as a tacit acknowledgement that his "Abenomics" economic policies, needed another 2-1/2 years to have a chance of succeeding. These domestic concerns, coupled with geopolitical risks like this month's Brexit vote, helped the yen cling to recent gains against the dollar.
Japan's automakers, which rely heavily on export sales, saw lower share prices due to the stronger yen. Toyota Motor Corp fell 1.1 percent while Nissan Motor Co Ltd slid 2 percent and Mazda Motor Corp shares were 2.9 percent lower in late morning trade.
Shares of home appliance and electronics exporter Panasonic Corp slipped 2.9 percent and tyre exporter Bridgestone Corp fell 2.6 percent.
The broader Topix declined 1.8 percent to 1,337.08 in late morning trade and the JPX-Nikkei Index 400 was 1.9 percent lower at 12,050.21. (Reporting by Joshua Hunt; Editing by Eric Meijer)
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