A man walks past an stock indicator showing the Nikkei 225 index, which nose-dived 1,143.28 points, or 7.3 percent, to close at 14,483.98 yesterday in Tokyo. Japanese stocks dove after a spike in bond yields and unexpectedly weak Chinese manufacturing spooked investors sitting atop months of massive gains. [AP/NEWSIS]

Japan’s stocks had their biggest fall since the aftermath of the Fukushima disaster, leading equities lower, as disappointing Chinese manufacturing data and Federal Reserve Chairman Ben Bernanke’s comments dampened investor sentiment.

The dollar rose against most of its major peers after Bernanke sparked speculation the central bank could slow the pace of bond purchases.

Trading in the Nikkei 225 Stock Average futures was halted after a slump in contracts triggered circuit breakers.

The Nikkei tumbled 7.3 percent and closed 14,483.98 yesterday, as Fast Retailing, the gauge’s largest constituent, sank 8 percent.

On Wednesday, just a day before the Chinese manufacturing data and Bernanke’s remarks on quantitative easing were announced, the Japanese stock measure closed at 15,627.26 backed by Abenomics’ unlimited quantitative easing measures.

It soared more than 5,000 points compared to the last trading day of December, when it closed at 10,395.18.

Japanese equities had risen “too much, too fast,” particularly financial stocks, and need “some kind of correction” before they can resume their climb, former Ministry of Finance official Eisuke Sakakibara said in a May 15 interview. Sakakibara is known as “Mr. Yen” because of his efforts to influence exchange rates in the late 1990s.

The MSCI All-Country World Index declined 1.3 percent to 373.13 as of 8:04 a.m. in London as Japan’s Topix Index slumped 6.9 percent, the most since March 2011. The Stoxx Europe 600 Index fell 1.7 percent, its first drop in five days.

Standard & Poor’s 500 Index futures retreated 1.2 percent. The dollar gained at least 0.9 percent against the Australian and Korean currencies.

Manufacturing in China unexpectedly contracted for the first time in seven months, according to a report from HSBC Holdings and Markit Economics.

“Weak data from China combined with speculation the Fed may phase out quantitative easing are causing jitters,” said Paul Joseph Garcia, who helps manage the equivalent of $18 billion as Manila-based head of institutional business at BPI Asset Management. “The tactical strategy is to be on the defensive -increase cash and reduce exposure to risky assets.”

The yen rose 1.3 percent to 101.87 per dollar as it strengthened against all 16 of its major peers. Japan’s 10-year bond yield declined five basis points to 0.84 percent in Tokyo, according to Japan Bond Trading. It earlier climbed to 1 percent, a level unseen since April 5 last year.

Meanwhile, the news from China, Japan and the United States also was felt in Korea’s blue chip Kospi and small cap Kosdaq markets. Kospi lost 1.24 percent to close at 1,969.19 and Kosdaq shed 0.86 percent to close at 569.34.

Market observers in Korea are keeping watchful eyes on the latest development of Nikkei as its future movement is likely to certainly influence the fluctuation of the Korean stock and foreign exchange market again.

Korea’s automobile and other industries, which compete with Japanese rivals, have been seeing snowballing losses due to weakening Japanese yen.


By Kim Mi-ju, Bloomberg [mijukim@joongang.co.kr]