Tokyo: Japanese stocks slid over 2% on Wednesday, 20 February, erasing the week’s gains, as property shares such as Sumitomo Realty & Development Co Ltd tumbled and investors locked in profits amid worries about the economy.
Surging oil prices have raised concerns about inflation in the US, including whether the Federal Reserve will be able to cut interest rates in March.
US crude oil jumped to an all-time high above $100 a barrel on Tuesday, with supply constraints helping to drive up the costs of other raw materials, though it had fallen below that level in Asian trade on Wednesday.
“Investors bid up the market earlier this week on expectations that U.S. stocks would do well once Wall Street returned from a holiday, but those hopes were betrayed,” said Yutaka Miura, chief technical analyst at Shinko Securities.
“Taking this along with the high oil prices and worries about the US economy, investors decided it was a good time to lock in profits.”
At 0429 GMT the benchmark Nikkei was down 2.4% at 13,430.06, its lowest since 15 February. The broader TOPIX index was down 2.4% at 1,312.84.
Some of the sharpest losses were by property firms after a research firm said it expected Japan condominium sales to slide for a third straight year in 2008.
The industry has been hurt by tighter building regulations and the Real Estate Research Institute said it saw sales sliding 8.4% to 123,000 condominiums in 2008 after a 14.2% drop last year.
Sumitomo Realty fell 8.4% to 1,960 yen while developer Mitsui Fudosan Co Ltd fell 6.6% to 2,135 yen and No.2 developer Mitsubishi Estate slid 4.8% to 2,490 yen.
Shares in oil-linked companies such as Inpex Holdings Inc, Japan’s largest oil explorer, pared morning gains. Inpex was up 1%, while among refinery firms Cosmo Oil Co Ltd was down 0.6% at 354 yen and AOC Holdings Inc up 2.1% at 1,081 yen.