Japanese stocks tumbled Wednesday, leading stock markets across the region sharply lower as a fresh bout of anxiety over Brexit risks rattled investors.
Japan’s Nikkei Stock Average NIK, -1.85% sank 1.9% as the yen continued its strengthening trend. Elsewhere, Australia’s S&P/ASX 200 XJO, -0.58% fell 0.6%, South Korea’s Kospi SEU, -1.85% dropped 1.9% and Hong Kong’s Hang Seng IndexHSI, -1.23% lost 1.2%. China’s Shanghai Composite Index SHCOMP, +0.36%however, rose 0.4%.
Investors buy Japan’s currency during times of market turmoil, but a strong currency chips away at the value of the repatriated income of Japanese exporters, so investors dump shares on expectations of lower earnings. The yen USDJPY, -1.41% was recently trading at 100.75 to the U.S. dollar.
“The stronger yen is obviously hurting Japan, so Japan [stocks are] crumbling,” said Andrew Clarke, director of trading at Hong Kong-based brokerage firm Mirabaud Asia.
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Shares of Japanese banks and exporters were hit hard. Shinsei Bank 8303, -3.55% was down 3.6%, Mitsubishi UFJ Financial Group 8306, -3.60% dropped 3.6%, and Nissan Motor 7201, -2.01% lost 2%.
An overnight decline in Brent crude oil LCOU6, -1.40% prices also pounded energy shares across the region. In Australia, Woodside Petroleum WPL, -0.64% fell 0.6%, and Oil Search OSH, -1.16% fell 1.2%. In Hong Kong, shares of Chinese state-owned firm Sinopec 0338, -0.85% lost 0.9%, and Cnooc 0883, -1.04% slumped 1%.
Chinese gold shares were among the day’s few winners. Zhongjin Gold Corp.600489, +10.09% jumped 10%.
The yield on Japan’s 10-year government bond TMBMKJP-10Y, -10.38% hovered at minus-0.269%, while the yield on Australia’s 10-year bond TMBMKAU-10Y, -3.99% fell to 1.861%, both historical lows. Bond yields fall as their prices rise.
“People are really looking everywhere and anywhere for potential yield,” Clarke said.
Meanwhile, an anomaly emerged in the iron-ore market. Prices rose even though the supply of the metal increased. The spot value of iron ore is up more than 10% since the start of June, while the inventory of imported ore at China’s ports is at an 18-month high.