August 13, 2018 / 7:10 AM / a month ago

Nikkei tumbles 2 pct to 5-week low as emerging market rout hits sentiment

* Commodity stocks hit as emerging market currencies tumble

* Mothers market index falls to lowest since April 2017

* Discount chain Don Quijote bucks trend on strong sales forecast

By Ayai Tomisawa

TOKYO, Aug 13 (Reuters) - Japan’s Nikkei tumbled 2 percent to a five-week low on Monday as a sell-off in emerging market currencies spooked stock investors, with the safe-haven yen’s appreciation hurting sentiment and dragging down the broader market.

Commodity stocks underperformed on worries about emerging market economies after the South African rand fell more than 10 percent versus the U.S. dollar as massive falls in the Turkish lira triggered sell-offs in other currencies.

The Nikkei share average dropped 440.65 points to 21,857.43, the lowest close since July 6.

All sectors except for services fell, with shippers, metal and iron stocks and construction machinery firms and financials stumbling.

“As long as the Turkey woes continue, there are worries that investors will keep unloading risky assets which include Japanese stocks,” said Chihiro Ohta, general manager at SMBC Nikko Securities.

The Mothers market, an index for startup companies, tumbled 4.1 percent to 962.48, its worst closing level since January 2017 and the biggest one-day drop in five months.

“Since risk sentiment was dampened by the strong yen and worries in emerging market currencies, growth stocks are the last place investors are looking,” said Hikaru Sato, a senior technical analyst at Daiwa Securities.

“Even defensive stocks were sold because there is too much uncertainty in the global market now,” he said.

The euro touched a 13-month low against the dollar on Monday as investors bid up safe havens such as the greenback and the yen on worries about the exposure of European banks to Turkey.

After hitting a record low 7.24 against the dollar early on Monday, Turkey’s lira found some support when Finance Minister Berat Albayrak said the government has drafted an economic action plan and the banking watchdog said it limited swap transactions.

The dollar fell 0.7 percent against the yen to 110.15 yen , the lowest level in six weeks.

Index-heavyweight Fast Retailing dropped 1.7 percent and knocked a hefty 30 points from the Nikkei, while technology stocks TDK Corp tumbled 5.3 percent and Tokyo Electron shed 3.1 percent.

Construction machinery stock Komatsu slid 4.0 percent and Hitachi Construction Machinery declined 4.2 percent.

Commodity stocks were hard hit. Nippon Steel & Sumitomo Metal Corp fell 2.5 percent. Shippers Mitsui OSK Lines lost 3.4 percent and Kawasaki Kisen tanked 5.2 percent.

Banking stocks also lost ground. Mitsubishi UFJ Financial Group dropped 2.8 percent and Sumitomo Mitsui Financial Group 2.1 percent.

Discount goods chain operator Don Quijote bucked the trend and soared 5.6 percent after saying it expects a 6.2 percent rise in sales to 1 trillion yen for the year ending June 2019, moving forward its goal for that volume by one year.

The broader Topix dropped 2.1 percent to 1,683.50. (Editing by Richard Borsuk)

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