Japanese shares tumbled on Wednesday, as crude oil futures extended their recent decline and a stronger yen undermined the shares of exporters.
The Nikkei stock index skidded 3.1 per cent in morning trade, pulling further away from a three-week high touched on Monday.
The broader Topix and the JPX-Nikkei Index 400 both fell 3.3 per cent.
“Almost every name in the N225 is down today, indicating a consensus from participants that it is time to sell,’’ said Hiroki Allen, chief representative of Superfund Securities Japan.
BOJ intervention
The downturn also reflects fading expectations that the Bank of Japan take supportive steps after its decision to introduce negative interest rates late last week, he said.
“BOJ intervention is not likely after the negative interest rate announcement, so sellers do not expect a reversal in the declining trend,’’ Allen said.
The BOJ’s move led to two sessions of strong gains for shares, as it occurred in tandem with a short-lived recovery in crude oil prices. But fears of a global oil supply glut gained the upper hand, kindled by forecasts of milder US weather, higher inventories and Iran’s plans to boost exports from March.
The Topix subindex for oil and coal stocks skidded 1.7 per cent.
Stronger yen
The yen also took back some of the ground it lost after the central bank’s move, strengthening for a third day. The dollar was buying 119.75 yen, down about 0.2 per cent, pulling further away from a six-week high of 121.70 yen hit on Friday after the BOJ’s announcement stunned markets.
The stronger currency hurt the shares of transport equipment makers and machinery makers, with both subindexes losing 5.4 percent.
Concerns about earnings also weighed on investors’ sentiment.
Brokerage shares also weakened, with Nomura Holdings Inc plunging 11.3 per cent after the company said net profit for the October-December quarter fell 49 per cent from the previous year to ¥35.4 billion ($295.84 million).
IHI Corp dropped 19 per cent after the company said it expects a net loss of ¥30 billion for the fiscal year through March, instead of the previously forecast profit of ¥18 billion.
Non-bank shares shed 4.4 per cent, extending their 2.5 per cent drop in the last session, after rallying in the previous two days.
Defensive shares had no immunity to the broad selloff, with drugmakers dropping 1.9 per cent. ($1 = 119.6600 yen)