HONG KONG (MarketWatch) — Japanese stocks plunged on Thursday, with the Nikkei Stock Average again diving more than 5% on heavy selling, amid concerns about market volatility as the dollar slid closer toward the 100-yen level.
The Nikkei Stock Average /zigman2/quotes/210597971/delayed JP:NIK +0.44% slumped 737.43 points, or 5.2%, to end at 13,589.03, its first close below the 14,000 level since May 2. The sell-off came exactly a week after the benchmark plunged 7.3% for its worst drop in more than two years, sharply snapping a steep rally that began late last year.
The dollar /zigman2/quotes/210561789/realtime/sampled USDJPY +0.2479% fell as low as ¥100.54 during the session. The tumble followed two straight days of gains for Japanese equities, amid worries about extreme volatility recently in the stock and bond markets.
Data released Thursday by the Ministry of Finance showed Japanese residents sold overseas stocks and bonds worth as much as ¥1.22 trillion ($121 billion) in the week to May 25, including foreign bond sales of ¥1.12 trillion.
Sue Trinh, a senior foreign exchange strategist at RBC Capital Markets, said the data appeared to confirm that small purchases made by the Japanese in recent weeks “was a mere blip in the overwhelming trend of foreign bond selling.”
Given the forex moves, exporters were among the major decliners in Tokyo. Sharp Corp. /zigman2/quotes/203224600/delayed JP:6753 -0.55% /zigman2/quotes/207472799/composite SHCAF +5.22% lost 7.3%, heavyweight fashion retailer Fast Retailer Corp. /zigman2/quotes/200663563/delayed JP:9983 +1.07% /zigman2/quotes/203924235/composite FRCOY -0.08% plummeted 11.1% and Hino Motors Ltd. /zigman2/quotes/207652388/composite HINOY +13.07% /zigman2/quotes/209422954/delayed JP:7205 +2.18% skidded 6.1%.
Among other notable losers, telecommunications firm KDDI Corp. /zigman2/quotes/204923990/delayed JP:9433 +1.47% /zigman2/quotes/205540401/composite KDDIY -0.20% lost 6.7%, Sumitomo Mitsui Trust Holdings Inc. /zigman2/quotes/207195052/delayed JP:8309 +2.01% skidded 7% and Dainippon Sumitomo Pharma Co. /zigman2/quotes/206847121/delayed JP:4506 -0.65% lost 6.9%.
The plunge came even as the yields on 10-year Japanese government bonds slumped 5 basis points to 0.89%, according to FactSet data.
Some analysts, meanwhile, raised concerns about the external outlook for exporters. In a note Thursday, Hong Kong-based HSBC managing director Frederic Neumann cited recent weak export data in Asia, saying the situation for the region’s exporters may not improve until after the summer.
“Exports look set to slow further, setting us up for another set of disappointing quarterly [gross domestic product] data,” he wrote. “But not all is lost ... In the U.S. and Japan, at least, a recovery appears likely over the second half of the year. This should also help unwind the recent build-up in inventories that has restrained output growth in Asia.”
But, Neumann said, “regional data may not turn up before the middle of the third quarter. So brace yourself for more wobbles ahead.”
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Rest of Asia mostly weak
Elsewhere in Asia, Australia’s S&P/ASX 200 /zigman2/quotes/210598100/delayed AU:XJO -0.42% retreated 0.9% on miner weakness and some poor data, while Hong Kong’s Hang Seng Index /zigman2/quotes/210598030/delayed HK:HSI -0.16% dropped 0.3% and the Shanghai Composite Index /zigman2/quotes/206600939/delayed CN:000001 +0.50% eased 0.3%.
Taiwan’s Taiex dropped 1.1%, and South Korea’s Kospi eased 0.1%.
The moves came after a down day for U.S. markets, with the Dow Jones Industrial Average /zigman2/quotes/210598065/realtime DJIA -0.38% and S&P 500 /zigman2/quotes/210599714/realtime SPX -0.80% each ending with a 0.7% deficit.