Japanese investors moved money out of stocks and into bonds and currencies on Friday. The shift came as the Nikkei Stock Average posted the third largest point drop in its history.
The 225-issue index ended down 3,643.13 points, or 5.96 percent, at 57,434.77. At one point during the session, it had lost more than 4,300 points.
The closing drop was larger than the previous third biggest fall of 3,318.34 points. That earlier decline was set on Oct. 15 this year.
The broader Topix index also fell sharply. It finished 232.40 points, or 5.90 percent, lower at 3,707.99.
Bonds and Currencies Draw Safe-Haven Buying
The yield on the benchmark 10-year Japanese government bond ended at 2.635 percent. That was down 0.120 percentage point from Thursday’s close, as buyers sought safety during a global stock sell-off.
Dealers said funds fled to the currency and bond markets during the plunge. This happened even though recent buying had been shifting toward non-technology sectors after the post-election losses.
Both the U.S. dollar and the yen attracted safe-haven buying as major stock indexes in both countries fell. The dollar mostly traded in the upper 157 yen range in Tokyo.
At 5 p.m., the dollar fetched 157.94-96 yen. That compared with 157.62-72 yen in New York and 158.18-20 yen in Tokyo at 5 p.m. Thursday.
The euro was quoted at $1.1176-1178 and 176.52-56 yen. Late Thursday afternoon in Tokyo, it had traded at $1.1242-1243 and 177.83-87 yen.
AI Stocks Lead the Decline
The Nikkei ended at its lowest level since mid-April after briefly falling more than 7 percent. AI and semiconductor-related shares led the losses, while nearly all issues on the Prime Market faced selling pressure.
Stocks tracked overnight losses on Wall Street. Dealers said concern resurfaced that Democratic victories in the U.S. midterm elections could lead to tighter restrictions on data center construction.
A rebound in West Texas Intermediate crude oil futures to above $90 per barrel also weighed on the market. On the Prime Market, food, oil and coal product, and real estate issues were among the main decliners.
Maki Sawada, a strategist at Nomura Securities, said Japanese stocks were sold across the board. Sawada pointed to growing uncertainty over the economic and political outlook after the U.S. midterm elections.
“Concerns about an economic slowdown emerged as a new factor today, leading to broader selling,” said Masahiro Ichikawa. He is chief market strategist at Sumitomo Mitsui DS Asset Management.
Japan Tobacco was among the hardest-hit stocks on Friday. Its shares plunged 19.3 percent to 6,269 yen, ending at their daily limit low.
The fall followed an order from Russian President Vladimir Putin. He ordered the company’s Russian assets to be placed under the temporary management of a Russian firm.
