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July 6, 2016, 5:33 a.m. EDT

Nikkei tumbles as yen strengthens on Brexit uncertainty

Other Asian markets also fall

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By Dominique Fong


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The Nikkei sank as the yen continued to rise.

Japanese stocks tumbled Wednesday, leading stock markets across the region sharply lower as a fresh bout of anxiety over Brexit risks rattled investors.

Japan’s Nikkei Stock Average /zigman2/quotes/210597971/delayed JP:NIK +0.18%  sank 1.9% as the yen continued its strengthening trend. Elsewhere, Australia’s S&P/ASX 200 /zigman2/quotes/210598100/delayed AU:XJO -0.32%  fell 0.6%, South Korea’s Kospi /zigman2/quotes/210598069/delayed KR:180721 +0.26%   dropped 1.9% and Hong Kong’s Hang Seng Index /zigman2/quotes/210598030/delayed HK:HSI +0.47%  lost 1.2%. China’s Shanghai Composite Index /zigman2/quotes/210598127/delayed CN:SHCOMP +2.07% , however, rose 0.4%.

The pound’s /zigman2/quotes/210561263/realtime/sampled GBPUSD +0.0232%  slump to a 31-year low overnight and comments from the Bank of England renewed worries about prolonged uncertainty in Europe. BOE Governor Mark Carney said Tuesday the central bank wouldn’t be able to completely mitigate economic pain, and that sent investors to the yen, the perceived haven in Asia.

Read: Brexit puts squeeze on central banks to fix financial jitters

Investors buy Japan’s currency during times of market turmoil, but a strong currency chips away at the value of the repatriated income of Japanese exporters, so investors dump shares on expectations of lower earnings. The yen /zigman2/quotes/210561789/realtime/sampled USDJPY -0.0115%  was recently trading at 100.75 to the U.S. dollar.

“The stronger yen is obviously hurting Japan, so Japan [stocks are] crumbling,” said Andrew Clarke, director of trading at Hong Kong-based brokerage firm Mirabaud Asia.

Click to Play

As markets slide, big banks are oversold

Sure, there are many reasons to worry about Goldman, JPMorgan, and other big financial institutions, but all that bad news is priced in.

Shares of Japanese banks and exporters were hit hard. Shinsei Bank /zigman2/quotes/210166295/delayed JP:8303 -1.70%  was down 3.6%, Mitsubishi UFJ Financial Group /zigman2/quotes/207520099/delayed JP:8306 -0.07%  dropped 3.6%, and Nissan Motor /zigman2/quotes/208298710/delayed JP:7201 +1.32%  lost 2%.

An overnight decline in Brent crude oil  prices also pounded energy shares across the region. In Australia, Woodside Petroleum /zigman2/quotes/203437212/delayed AU:WPL -0.33%  fell 0.6%, and Oil Search /zigman2/quotes/204702973/delayed AU:OSH -0.35%  fell 1.2%. In Hong Kong, shares of Chinese state-owned firm Sinopec /zigman2/quotes/203060554/delayed HK:338 +0.68%  lost 0.9%, and Cnooc /zigman2/quotes/203421416/delayed HK:883 -0.84%  slumped 1%.

Chinese gold shares were among the day’s few winners. Zhongjin Gold Corp. /zigman2/quotes/207741711/delayed CN:600489 +1.89%  jumped 10%.

In other markets, investors continued their hunt for yield in longer-dated bonds. The yield on Japan’s latest 20-year note /zigman2/quotes/211347250/realtime BX:TMBMKJP-20Y 0.00%  hit an all-time low of minus-0.005% in Tokyo trading, touching negative territory for the first time.

The yield on Japan’s 10-year government bond /zigman2/quotes/211347248/realtime BX:TMBMKJP-10Y 0.00%  hovered at minus-0.269%, while the yield on Australia’s 10-year bond /zigman2/quotes/211347066/realtime BX:TMBMKAU-10Y 0.00%  fell to 1.861%, both historical lows. Bond yields fall as their prices rise.

“People are really looking everywhere and anywhere for potential yield,” Clarke said.

Meanwhile, an anomaly emerged in the iron-ore market. Prices rose even though the supply of the metal increased. The spot value of iron ore is up more than 10% since the start of June, while the inventory of imported ore at China’s ports is at an 18-month high.

/zigman2/quotes/210597971/delayed
JP : Nikkei
23,360.30
+40.93 +0.18%
Volume: 0.00
Sept. 18, 2020 3:15p
loading...
/zigman2/quotes/210598100/delayed
AU : S&P ASX
5,864.50
-18.70 -0.32%
Volume: 1.51M
Sept. 18, 2020 5:05p
loading...
/zigman2/quotes/210598069/delayed
KR : Korea Exchange
2,412.40
+6.23 +0.26%
Volume: 756,516
Sept. 18, 2020 3:32p
loading...
/zigman2/quotes/210598030/delayed
HK : Hong Kong Exchange
24,455.41
+114.56 +0.47%
Volume: 2.30M
Sept. 18, 2020 4:09p
loading...
/zigman2/quotes/210598127/delayed
CN : China: Shanghai
3,338.09
+67.65 +2.07%
Volume: 25.63B
Sept. 18, 2020 3:01p
loading...
/zigman2/quotes/210561263/realtime/sampled
US : Tullett Prebon
1.2921
+0.0003 +0.0232%
Volume: 0.0000
Sept. 18, 2020 4:59p
loading...
/zigman2/quotes/210561789/realtime/sampled
US : Tullett Prebon
104.5600
-0.0120 -0.0115%
Volume: 0.0000
Sept. 18, 2020 4:59p
loading...
/zigman2/quotes/210166295/delayed
JP : Japan: Tokyo
¥ 1,390.00
-24.00 -1.70%
Volume: 2.03M
Sept. 18, 2020 3:00p
P/E Ratio
8.43
Dividend Yield
0.72%
Market Cap
¥318.83 billion
Rev. per Employee
¥54.32M
loading...
/zigman2/quotes/207520099/delayed
JP : Japan: Tokyo
¥ 441.40
-0.30 -0.07%
Volume: 51.38M
Sept. 18, 2020 3:00p
P/E Ratio
17.82
Dividend Yield
5.66%
Market Cap
¥5668.02 billion
Rev. per Employee
¥50.52M
loading...
/zigman2/quotes/208298710/delayed
JP : Japan: Tokyo
¥ 384.10
+5.00 +1.32%
Volume: 18.72M
Sept. 18, 2020 3:00p
P/E Ratio
N/A
Dividend Yield
0.00%
Market Cap
¥1503.01 billion
Rev. per Employee
¥85.36M
loading...
/zigman2/quotes/203437212/delayed
AU : Australia: Sydney
$ 18.28
-0.06 -0.33%
Volume: 6.75M
Sept. 18, 2020 4:10p
P/E Ratio
N/A
Dividend Yield
6.06%
Market Cap
$17.52 billion
Rev. per Employee
$1.92M
loading...
/zigman2/quotes/204702973/delayed
AU : Australia: Sydney
$ 2.82
-0.01 -0.35%
Volume: 10.48M
Sept. 18, 2020 4:10p
P/E Ratio
N/A
Dividend Yield
5.01%
Market Cap
$5.86 billion
Rev. per Employee
$1.46M
loading...
/zigman2/quotes/203060554/delayed
HK : Hong Kong
HK$ 1.47
+0.01 +0.68%
Volume: 17.36M
Sept. 18, 2020 4:09p
P/E Ratio
N/A
Dividend Yield
8.91%
Market Cap
HK$33.79 billion
Rev. per Employee
HK$11.81M
loading...
/zigman2/quotes/203421416/delayed
HK : Hong Kong
HK$ 8.29
-0.07 -0.84%
Volume: 78.65M
Sept. 18, 2020 4:09p
P/E Ratio
8.09
Dividend Yield
7.84%
Market Cap
HK$370.13 billion
Rev. per Employee
HK$13.96M
loading...
/zigman2/quotes/207741711/delayed
CN : China: Shanghai
¥ 10.80
+0.20 +1.89%
Volume: 37.95M
Sept. 18, 2020 3:00p
P/E Ratio
70.40
Dividend Yield
0.18%
Market Cap
¥52.35 billion
Rev. per Employee
¥1.20M
loading...
/zigman2/quotes/211347250/realtime
add Add to watchlist BX:TMBMKJP-20Y
BX : Tullett Prebon
0.40
0.00 0.00%
Volume: 0.00
Sept. 18, 2020 6:00p
loading...
/zigman2/quotes/211347248/realtime
add Add to watchlist BX:TMBMKJP-10Y
BX : Tullett Prebon
0.01
0.00 0.00%
Volume: 0.00
Sept. 18, 2020 6:00p
loading...
/zigman2/quotes/211347066/realtime
add Add to watchlist BX:TMBMKAU-10Y
BX : Tullett Prebon
0.90
0.00 0.00%
Volume: 0.00
Sept. 18, 2020 4:30p
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Robb Stewart, Rhiannon Hoyle, Hiroyuki Kachi, Kosaku Narioka and Yifan Xie contributed to this report.

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