TOKYO: NIKKEI 225 DROPS 5.4%
August 17th, 2007Via: CNN:
Japanese shares closed sharply lower on Friday, with the benchmark Nikkei index posting its biggest single-day point decline since April 2000 as the sharp rise in the yen hit exporters, aggravating concerns about a tightening global credit market.
Worries about a global credit crisis accelerated the unwinding of yen carry trades, resulting in a rapid appreciation of the Japanese currency.
The Nikkei 225 Stock Average finished down 874.81 points or 5.4 percent at 15,273.68, off the day’s low of 15,262.10. This was its lowest closing level since Aug 7, 2006 when it finished at 15,154.06. The blue-chip index fell 8.9 percent over the week.
The Nikkei is now 16.5 percent below the seven-year high of 18,300.39 touched last Feb 26.
The broader TOPIX index fell 87.07 points or 5.6 percent to 1,480.39, a touch off the intraday low of 1,479.82. The index shed 9.4 percent this week.
Decliners overwhelmed gainers 1,620 to 87, with 17 issues unchanged.
Volume traded rose to 2.94 billion shares from 2.68 billion shares on Thursday.
Kazuhiro Takahashi, equity general manager at Daiwa Securities SMBC, said the Nikkei 225 dropped rapidly in afternoon trade led by the futures market.
‘After the index dropped below the psychologically-important level of 15,500 points, the pace of its fall accelerated, with investors having difficulty finding the right timing to buy on dips,’ he said.
‘The yen’s further appreciation also triggered worries about its impact on exporters’ earnings,’ he said.
With the financial markets worldwide remaining volatile and as concerns about the US economy mount, investors are no longer as keen about an anticipated August interest rate increase by the Bank of Japan. The Japanese central bank will hold its two-day policy meeting August 22-23.
Holy shit!
I dread to think where this is headed….
Cheap yen have been greasing the rails for years now. With that stuff going home…
The three words that came to my mind were: global liquidity crisis
But maybe not. There are lots of black ops bankers out there with who-knows-what funny money mechanisms up their sleeves. But it’s going to get weird. And if it doesn’t get weird enough, it’s going to get bloody.
Almost certainly, it will get weird and bloody.