Roundup: Tokyo stocks plunge as financial sector fears turn global markets bearish

Tokyo stocks plunged Friday with the benchmark Nikkei average falling below the 15,000 line for the first time in 16 months.

A swathe of issues were dumped on the yen's rapid rise, fueled by concerns in financial markets about a rising tide of bad debt eroding valuations, reminiscent of the crash in 2008, which stoked a global bearish mood.

The 225-issue Nikkei Stock Average plunged 760.78 points, or 4.84 percent, from Wednesday to close at 14,952.61, while the broader Topix index of all First Section issues on the Tokyo Stock Exchange, meanwhile, tumbled 68.68 points, or 5.43 percent, to finish at 1,196.28.

Tokyo markets were closed Thursday for a national holiday.

Investors were in a risk-off mood from the get go, as the yen's steep rise against the U.S. dollar created consternation as the market's exporter-linked heavyweights saw profit outlooks squeezed on possible earnings revisions, as a strong yen impacts profits when they're repatriated and competitiveness is compromised in overseas markets.

In addition, traders dumping riskier assets, in twine with the U.S. dollar, and buying up Japanese yen, which ramps up its value, also underpinned ongoing concerns that market players opting for the yen as a safe haven underscores wider concerns about the health of the global economy, with analysts here saying that the market here could remain pressured for some time.

The bearish mood also highlights the widespread belief on market floors that international central banks opting for further easing measures is having little impact on fundamentals, including the Bank of Japan (BOJ) adopting a negative interest rate to little effect, other than sparking fears the BOJ has now run out of tools for easing henceforth.

The latest bank to unleash more easing was the Swedish central bank that opted to further plunge its rates into negative territory.

Concerns for private bank's valuations following ballooning holdings of debt that can't be written off, affecting banks on both sides of the Atlantic, has sparked a 2008-like fear of an impending financial crisis, which Friday saw financial issues in Asia, including on bourses in Tokyo, take a pummeling.

One local trader noted that investors were opting for safe havens like the yen because fears for the global economic outlook were "gloomy."

He added that U.S. Federal Reserve chief Janet Yellen's congressional testimony on Wednesday stoked fears that delaying the next interest rate hike and conceding the U.S. economy was under pressure from global developments meant a protracted period of downturn was expected, which pushed the dollar down versus the yen.

In currency trading, the dollar tumbled to 112.09 yen from 112.29 yen the previous day, while the euro dropped to 1.1307 U.S. dollars from 1.1315 U.S dollars.

Compounding global bear markets has been the ongoing oil glut and slumping prices, with crude oil futures plunging to 26.21 U.S. dollars per barrel in New York, having dropped to 26.05 U.S. dollars at one point, which is close to a 13 year low, as traders switched into safer havens like bonds and precious metals like gold.

Among financial issues which have been lending heavily to the energy sector and took a battering Friday on fears for the broader worldwide banking sector, top lender Mitsubishi UFG Financial Group dropped 2.2 percent and Mizuho Financial Group Inc. fell 3.7 percent.

Nomura Holdings, meanwhile, tanked 9.2 percent to close at 446.60 yen, while Sony Financial Holdings plunged 6.8 percent to end the day at 1,356 yen.

Bluechips and export-linked issues were pressured as the yen's rise erodes profit outlooks, and Fuji Heavy Industries pitched 9 percent to 3,472 yen and Mazda Motor skidded down 9.4 percent to 1486.00 yen. Also of note, the world's largest automaker, Toyota Motor Corp., reversed 6.8 percent and Honda Motor Co. slumped 5.5 percent.

Resource and energy-linked shares further lost ground as prices for crude remained low, and Cosmo Energy Holdings fell 7.7 percent to 1,066 yen, while JX Holdings relinquished 4.3 percent to 424.20 yen.

Japan's Finance Minister Taro Aso on Friday said that rapid swings in currency markets were undesirable and hinted that his ministry will intervene into the market to counter the yen's rapid appreciation against a basket of other currencies if necessary.

Noting "wild swings" in the currency market, Aso said that such volatility is "undesirable as agreed by the Group of Seven industrialized nations."

"We will monitor the developments in the currency market carefully and will respond appropriately when necessary," Aso also said, while refusing to comment directly on mounting speculation that the ministry may intervene in the currency market to halt the yen's rapid rise.

"Recent foreign exchange moves have been very rough. I am very nervously watching these moves and will take appropriate steps as necessary," the finance minister remarked, however, hinting at a possible imminent foray into markets to curb the yen's rise.

For Japan, a strong yen threatens to derail the prime minster's "Abenomics" blend of economic policies. Prime Minister Shinzo Abe's economic policy is largely based on the ongoing assumption of the yen's comparative weakness spurring exports, factory output and bolstering business spending and salaries, on accommodative lending policies. Enditem