Tokyo, June 17, 2024 — Tokyo stocks closed sharply lower on Monday, driven by investor concerns over political instability in Europe and potential economic slowdown in the United States. Japan’s benchmark Nikkei stock index, the 225-issue Nikkei Stock
Average, tumbled by 712.12 points, or 1.83 percent, from Friday, ending the day at 38,102.44. This marked the largest single-day drop since April 25, when the index fell by 831.60 points.
The broader Topix index also experienced a significant decline, shedding 46.60 points, or 1.70 percent, to close at 2,700.01, its lowest level since April 26. The market sentiment was notably affected by the Dow Jones Industrial Average’s performance on Friday, which saw a decline amidst rising concerns over a potential U.S. economic slowdown and the growing influence of far-right political parties in France.
Market analysts observed that the sharp drop in European stocks heavily influenced Tokyo’s trading environment, leading to widespread selling in key sectors such as automotive, machinery, and trading companies. The political uncertainties in Europe, particularly in France, added to the global market jitters, prompting investors to reduce their exposure to riskier assets.
Additionally, remarks by Bank of Japan (BOJ) Governor Kazuo Ueda following the monetary policy meeting on Friday further contributed to the bearish market sentiment. Governor Ueda announced a reduction in the scale of the BOJ’s long-term government bond purchases, which coupled with a stronger yen against the dollar, exerted additional downward pressure on Tokyo stocks.
The yen’s appreciation against the dollar tends to negatively impact Japan’s export-driven economy, as it makes Japanese goods more expensive and less competitive abroad. This currency dynamic added to the selling pressure on Tokyo stocks, particularly in the export-heavy sectors.
In the day’s trading, declining issues outnumbered advancing ones by a wide margin, with 1,264 stocks falling compared to 336 rising, and 46 issues remaining unchanged. The extensive sell-off reflected the heightened caution among investors in the face of global economic uncertainties and geopolitical tensions.
Looking ahead, market watchers suggest that the performance of Tokyo stocks will likely remain volatile as investors continue to monitor developments in Europe and the U.S. economic landscape. The interplay between domestic monetary policy decisions and global economic conditions will be crucial in shaping the near-term trajectory of the Japanese stock market.