【Fujitomi】Tokyo Stock Market Slumps Sharply as Various Speculations Fly Ahead of US-China Summit
The Nikkei stock average fell back, closing at 18,810.25 yen, down 172.98 yen (0.91%) from the previous day. It avoided updating the intraday year-to-date low of 18,650.33 yen set on January 18, but is near the lower end of the range that has lasted since December last year. Geopolitical risk rose following news of a subway bombing in Russia and reports that the United States would independently target North Korea with sanctions. There has also been widespread speculation about a U.S.-China summit starting on the 6th, which pushed up the yen. Additionally, doubts about U.S. fundamentals continued to emerge due to the lack of clarity around President Trump’s policy execution. On the other hand, support for the downside came from expectations of Japanese ETF purchases by the Bank of Japan and hopes that the domestic-led defensives would show solid earnings in the latter half of the month as results are released.
The Nikkei JASDAQ Average and the TSE Mothers Index both fell sharply for the third straight session. Selloffs accelerated due to automatic margin calls, with Mothers’ index decline briefly exceeding 4%, and trading value reaching its highest in about a month since February 28.
TOPIX briefly dropped below 1,500 on a intraday basis for the first time since January 18. The close was down 12.49 points (0.82%) at 1,504.54, setting a year-to-date low. The total trading value on the TSE First Section was 2.5741 trillion yen, and the trading volume was 2,260.5 million shares. The number of declining issues on the First Section was 1,620, advancing 325, and 67 were unchanged.
Nikkei futures fell back, briefly piercing the March low of 18,790 yen. The market is under pressure from the January low of 18,630 yen, and if this level is breached, the December 2016 low of 18,220 could become the next target. The lower bound of the Ichimoku cloud may act as a resistance line, with around 19,000 and 19,135 yen likely to serve as near-term resistance.
