Tokyo stocks sink, yen rises on Iran's attacks on U.S. forces

08, Jan. 2020

TOKYO, Kyodo - Tokyo stocks plunged Wednesday morning, with the Nikkei briefly dropping below the 23,000 line for the first time since November, as Middle East tensions escalated after Iran fired missiles at Iraqi bases that host U.S. troops.

The Nikkei lost more than 600 points at one point. The 225-issue Nikkei Stock Average shed 461.08 points, or 1.96 percent, from Tuesday to 23,114.64. The broader Topix index of all First Section issues on the Tokyo Stock Exchange was down 31.29 points, or 1.81 percent, at 1,693.76.

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Investors flocked to safe-haven assets with the U.S. dollar briefly sinking to a three-month low of around 107.65 yen before recovering to the lower 108 yen range in the late morning. Bonds and gold were also in high demand.

A broad range of shares drew selling including marine transportation, precision instrument and real estate issues, after Iran launched more than a dozen ballistic missiles targeting at least two Iraqi military bases hosting U.S. military and coalition forces.

The attacks following the U.S. killing of a top Iranian general last Friday further heightened tensions in Middle East and triggered concerns of a broader conflict in the region, brokers said.

"Investors had thought there wouldn't be a direct military action from Iran," said Yutaka Miura, senior technical analyst at Mizuho Securities Co. "Shares tumbled on strong caution the conflicts could escalate."

"If Iran conducts another round of attacks or the United States retaliates, the Nikkei is expected to fall to around the 22,000 line," Miura added.

Amid a risk-off mood, investors initially sold the dollar against the yen, but it was bought back later on receding concerns. At noon, the U.S. currency traded at 108.40-41 yen compared with 108.41-51 yen in New York at 5 p.m. Tuesday.

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The euro was quoted at $1.1158-1159 and 120.95-96 yen against $1.1151-1161 and 120.77-87 yen in New York late Tuesday afternoon.

Gold futures jumped to a fresh record high at the Tokyo Commodity Exchange and the yield on the benchmark Japanese 10-year government debt fell further into negative territory.

Worries about U.S.-Iran tensions lifted oil prices in Tokyo, with Middle East crude oil futures briefly spiking to a seven-month high at the commodity exchange.

On the First Section, declining issues outnumbered advancers 2,063 to 77, while 21 ended the morning unchanged.

A stronger yen weighed on a broad range of export-related issues, with electronic component maker TDK plunging 380 yen, or 3.1 percent, to 11,800 yen, Panasonic slumping 25.50 yen, or 2.4 percent, to 1,020.50 yen and Toyota Motor losing 125 yen, or 1.6 percent, to 7,590 yen.

Marine transportation issues took a hit from fears that heightened tensions in the Middle East will push up fuel prices. Kawasaki Kisen collapsed 106 yen, or 6.0 percent, to 1,664 yen, Mitsui O.S.K. Lines tumbled 114 yen, or 3.9 percent, to 2,789 yen and Nippon Yusen was down 56 yen, or 2.9 percent, at 1,875 yen.(Kyodo)