TOKYO’S benchmark Nikkei 225 index plunged more than 5% in morning trade today amid rising doubts about the American economy and fears sparked by a US government funding crisis.
At the midday break, the Nikkei index was down 5.05%, or 1,018.74 points, at 19,147.45, after dipping to as low as 19,138.88 – the lowest level since April last year.
The broader Topix index dipped 4.99%, or 74.27 points, to 1,413.92 by the break.
Analysts previously warned that the Japanese market would be volatile after steep falls on Wall Street yesterday, and with a higher yen against the dollar weighing on sentiment.
But, Makoto Sengoku, a market analyst at Tokai Tokyo Research Institute, admitted surprise at the scale of the rout.
“I didn’t expect the market would tumble this much,” he told AFP.
“There are no signs of selling running its course or big buyers emerging.”
The dollar fetched 110.13 yen at midday Tokyo time, down from 110.43 yen in New York yesterday and 111.38 yen in Asian trade on Friday.
The Tokyo market was closed yesterday for a national holiday.
In New York, US shares fell sharply with investors unnerved by weekend reports that President Donald Trump had asked about the possibility of firing Federal Reserve chairman Jerome Powell.
The dive also came after Treasury Secretary Steven Mnuchin’s efforts to reassure investors fell flat.
Mnuchin was widely panned by market watchers over a phone call with the six biggest US banks, reporting on Twitter that the six CEOs have “ample liquidity” available.
The move “prompted worries in the market”, Toshiyuki Kanayama, a senior market analyst at Monex, said in a note.
Automakers were among the losers, with Toyota dropping 5.31% to 5,075 yen, Honda down 5.2% at 2,769.3 yen and Nissan off 5% at 838.7 yen at the break.
Sony was down 5.18% at 5,021 yen and Panasonic dropped 5.17% at 923.8 yen at the break.