Yen Consolidates Losses

Japan’s Nikkei 225 dropped below 16,000 for the first time in two months on Thursday morning, following sharp falls across major global markets. The sharpest declines were concentrated on domestically focused sectors – suggesting continued fears about high stock valuations. By midday the Nikkei was down 2% to 15,977.71. The Topix was 2.2% lower at 1,619.90. Among domestically focused stocks, insurers plunged 4.9%, with securities down 4.1% and banking 3.4% lower. Declines among insurers and securities firms were particularly sharp because they are highly sensitive to market movements. A fall in share prices cuts insurers’ portfolio values, and provokes fears that investors will stop buying Japanese shares, hitting securities houses. T&D, the life insurer, plunged 5.8% to Y7,630. Millea, which is stronger in non-life insurance, fell 4.7% to Y2,040,000. Nomura, Japan’s biggest securities house, fell 3.8% to Y2,280, hit by its announcement that it planned to pay a smaller dividend for the present year than for the year just ended. The iron and steel sector dropped 2.5%, damaged by fears of higher material prices. Nippon Steel, Japan’s biggest steelmaker, was down 3% to Y415. Non-ferrous metals declined 2.9%, responding to lower commodity prices. Sumitomo Metal Mining plunged 4.6% to Y1,528.

Japanese government bond prices dropped to 100.536 on speculation that the Bank of Japan will upgrade their assessment of the economy tomorrow, yields were up to 1.935% this morning.