Published: Fri, December 28, 2018
Markets | By Erika Turner

Nikkei plunges over 1000 points to hit 20-month closing low

Nikkei plunges over 1000 points to hit 20-month closing low

The yen's weakening against the dollar also served as a tailwind to Japanese shares, market sources said.

The broader TOPIX index was at 1,490, up 58 points from the previous close.

Analysts said investors had been spooked by Trump's unpredictable behaviour.

Nobuhiko Kuramochi, investment information's chief at Mizuho Securities Co.in Tokyo said, "It's just like panic selling, the equity markets are pricing in concerns over a slowdown in the global economy and a downward revision in corporate earnings in advance".

The Nikkei index rose over 300 points at one point in the morning following a five-session losing streak, as investors came to the realization they "overreacted" to a global sell-off on Tuesday, brokers said.

"Although the US economy is strong right now, traders have started to see a risk of the world's largest economy weakening next year as the effects of (President Donald) Trump's tax cuts start falling off", said Norihiro Fujito, senior investment strategist at Mitsubishi UFJ Morgan Stanley Securities Co.

Investors are on edge as USA stock markets prepare to reopen after a brutal Christmas Eve rout. "Markets are driven by perception and it is flat-out bad", he told AFP. The S&P 500 plunged nearly 3 percent to end at a 20-month low on Monday.

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The yuan was quoted at 6.878 per US dollar, 0.3 percent firmer than the previous close of 6.8984. But I think it will straighten.

In interdealer cash bond trading, the key 10-year JGB yield briefly fell to zero percent for the first time since September 11, 2017.

A stronger yen was adding to the woes for markets in Japan, he added.

The fall followed a brutal holiday-shortened session on Wall Street that saw US stocks sink for a fourth straight session as investors took little heart from efforts by US Treasury Secretary Steven Mnuchin to reassure them.

Mnuchin's failure to restore market confidence with calls to six major USA banks, and then an emergency meeting Monday with regulators, rekindled speculation that the former Goldman Sachs Group Inc. executive could become a new target for Trump's ire.

The Nikkei falling back through the 20 000 level is "not very" important, said Jaiganesh Balasubramaniam, a market technician at Cashthechaos.com. It gained 171.32 points Wednesday.

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