This May 7, 2020 file photo shows the Tokyo Stock Exchange. (Mainichi)
TOKYO (Kyodo) — Tokyo stocks dropped sharply and the yen strengthened Friday morning, hit by heightened tensions in the Middle East after the Israeli military attacked Iranian nuclear and military sites.
The 225-issue Nikkei Stock Average fell 507.16 points, or 1.33 percent, from Thursday to 37,665.93. The broader Topix index was down 35.01 points, or 1.26 percent, at 2,747.96.
The U.S. dollar briefly sank to the upper 142 yen range in Tokyo, as the Japanese currency, seen as a safe-haven asset, was bought amid concern about the deteriorating situation in the Middle East.
The yen’s appreciation also came as the dollar was sold after recent U.S. inflation-related data came in weaker than expected, fueling speculation about a possible interest rate cut by the Federal Reserve, dealers said.
At noon, the dollar fetched 143.07-09 yen compared with 143.45-55 yen in New York and 143.87-88 yen in Tokyo at 5 p.m. Thursday.
The euro was quoted at $1.1542-1546 and 165.13-21 yen against $1.1580-1590 and 166.17-27 yen in New York and $1.1525-1527 and 165.82-86 yen in Tokyo late Thursday afternoon.
On the bond market, the yield on the benchmark 10-year Japanese government bond briefly fell to 1.385 percent, its lowest in about a month, as investors shifted away from riskier assets.
The Nikkei stock index briefly lost more than 600 points, as exporter shares were hit by the firmer yen after Israel said it struck dozens of facilities in Iran. A stronger yen hurts the overseas profits of exporters when repatriated.
Automakers were sold after U.S. President Donald Trump said Thursday he may increase his 25 percent tariff on foreign-made cars “in the not-too-distant future” in a bid to attract more investment to American manufacturing.
Meanwhile, oil and energy stocks were bought after crude oil prices surged due to the deteriorating geopolitical situation in the Middle East.
AloJapan.com