Tokyo’s Nikkei index dropped sharply by 3.02 percent or 1,098.77 point to 35,292.70 at the opening of trading on Monday.
The recent global market turmoil, sparked by weaker than expected US job growth and speculation over a possible interest rate reduction by the Federal Reserve, has led to this decline.
Topix Index also drops 2.67%
The Topix Index, which is a broader measure, saw an overall decrease of 2,67%, or 69.28 point, to reach 2,528.14.
Tokyo’s market is experiencing a decline in value after the US has suffered significant losses due to disappointing job data.
The second quarter GDP of Japan was 2.9%, on an annualized base. This is lower than the expected 3.2% by Reuters’ economists and 3.1% in advance.
Bank of Japan will be limited in its ability to increase rates if the GDP figure is lower.
The dollar strengthens against the yen
The US dollar’s value was 142.60yen on Monday, an increase of 0.4 yen from the 142.29yen that New York recorded last Friday.
The rise of the dollar in recent months has contributed to volatility on the Japanese stock markets. Traders are trying to adjust to both the global economy and the domestic monetary policy.
Toshiyuki KANAYAMA, senior analyst of brokerage Monex noted that “Japanese market is expected to begin with a substantial decline because losses on US markets and caution due to the strong yen.”
The caution is a reflection of ongoing concern about the possible impact of an interest rate reduction by the US Federal Reserve on global financial stability.
Semiconductor shares hit hard
Tokyo semiconductor stocks suffered a significant drop. Tokyo Electron closed at 20,730yen down 5.77 %, and Advantest dropped 5.85 % to 5,525yen.
The global uncertainty in economics has led to a downturn of the technology industry.
Automobile manufacturers also saw declines. Toyota shares dropped by 3.14 percent and Honda stock fell by 3.47 percent.
This weakening of the performance by these industry leaders reflects wider economic pressures on Japan’s markets.
Seven & i Holdings sees gain
Seven & i Holdings (the Japanese firm known for 7-Eleven convenience store) experienced a significant increase in the stock price of its company.
Seven & i shares rose 2.84 percent, to 2,194 yen. Bloomberg News reported that Canadian retailer Alimentation Couche-Tard is “highly committed” to pursuing an acquisition.
Seven & i, which announced its rejection of an initial offer by Couche-Tard on Friday after describing it as “grossly valuing the company”, has now confirmed the news.
The speculation about a possible future deal has boosted the stock of the company.
As new information becomes available, the post Nikkei Index drops more than three percent amid global stock market collapse may be updated.
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