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Business News/ Market / Stock-market-news/  Nikkei falls 2.3% as yen strengthens on Swiss rate cap move
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Nikkei falls 2.3% as yen strengthens on Swiss rate cap move

Fast Retailing, SoftBank together take hefty points off from Nikkei; Ibiden, Shinko Electric fall on Intel's weaker-than-expected forecast

By mid-morning trade, the Nikkei was at 16,711.26, nearing a one-month low of 16,672.94 hit on 17 December. Photo: AFP Premium
By mid-morning trade, the Nikkei was at 16,711.26, nearing a one-month low of 16,672.94 hit on 17 December. Photo: AFP

Tokyo: Japan’s Nikkei share average fell 2.3% on Friday morning after US stocks dropped for a fifth day and the yen rose after Switzerland abandoned its cap on the franc, hurting Japanese exporters such as electronics and car manufacturers.

By mid-morning trade, the Nikkei was at 16,711.26, nearing a one-month low of 16,672.94 hit on 17 December. For the week, the benchmark has fallen 2.8%. Index-heavy shares tumbled, with SoftBank Corp. and Fast Retailing Co. Ltd falling 3.3% and 3.2%, respectively.

The two companies together took a hefty 87 points off the index, roughly a quarter of the index’s losses in mid-morning trade.

The Swiss National Bank scrapped its cap on the franc in a surprise move, pushing the Swiss currency up sharply, depressing the euro and stoking demand for the safe-haven yen.

Traders assumed the Swiss had moved with the knowledge that the European Central Bank would launch large-scale quantitative easing at its policy meeting on 22 January.

“Investors will likely stay cautious against overseas developments for 2-3 weeks given weak oil prices and commodity price as well as the global economic concern," said Chisato Haganuma, chief strategist at Mitsubishi UFJ Morgan Stanley Securities.

“When Japanese companies start releasing their (third quarter) earnings at the end of the month, stocks will likely reflect their strong results."

The dollar hit a fresh one-month low of ¥115.90, after regaining ground at 116.26 in Asian trade. Sony Corp. dropped 4.4%, Advantest Corp. fell 2.8% and Nissan Motor Co. Ltd shed 1.9%.

Companies with significant exposure to the computer industry were also under pressure after chipmaker Intel Corp.’s revenue and gross margin forecasts for this quarter were worse than expected.

Ibiden Co. shed 2.2% and Shinko Electric Industries Co dived 5.5%. The broader Topix dropped 1.9% to 16,776.97 and the JPX-Nikkei Index 400 fell 1.6% to 12,282.08. Reuters

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Published: 16 Jan 2015, 08:41 AM IST
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