Japan’s Nikkei share average stumbled to a one-week low on Wednesday morning hit by a renewed drop in oil prices, while a stronger yen dragged down exporters.
Crude prices settled down more than 4 per cent as Saudi Oil Minister Ali Al-Naimi effectively ruled out production cuts anytime soon. Inpex Corp fell 1.1 per cent and Japan Petroleum Exploration Co shed 1.7 per cent.
By 0156 GMT, the Nikkei dropped 0.4 per cent to 15,986.19, after falling to as low as 15,753.77, the lowest level since February 17.
Japanese equities have been volatile since the beginning of the year, with the market swayed by fluctuations in the yen and oil prices.
Analysts said investors remain on edge as they are worried the global slowdown may be more serious than expected and that the yen will continue to be favoured as markets remain risk averse.
“When the yen rises, Japanese equities are the ones to suffer selling the most as investors are worried about exporters’ earnings for the next fiscal year. Unfortunately this trend may last for a while,’’ said Hiroyuki Nakai, chief strategist at Tokai Tokyo Research Center.
When the yen rises, it will cut exporters’ profits made abroad when repatriated.
Exporters were lower, with Toyota Motor Corp dropping 0.6 per cent, Honda Motor Co falling 2.5 per cent and Tokyo Electron Ltd shedding 2.5 per cent.
The dollar was flat at 112.05 yen during Asian trade after losing 0.7 per cent overnight, with mixed US data and dovish comments from a US Federal Reserve policymaker weighing on the dollar.
Recently battered banks outperformed. Mitsubishi UFJ Financial Group rose 2.3 per cent and Sumitomo Mitsui Financial Group gained 2.1 per cent.
The broader Topix dropped 0.5 per cent to 1,285.27 and the JPX-Nikkei Index 400 fell 0.6 per cent to 11,622.67.