Tokyo shares down by break on weaker oil prices
TOKYO: Tokyo stocks retreated on Thursday morning as another fall in oil prices hit energy shares while a pick-up in the yen also weighed, ahead of a key European Central Bank meeting later in the day.
The benchmark Nikkei 225 index at the Tokyo Stock Exchange was down 0.22 percent, or 43.29 points, at 19,894.84 by the lunch break, while the broader Topix index of all first-section shares fell 0.21 percent, or 3.43 points, to 1,598.83.
Traders tracked a Wall Street sell-off as energy firms were hit by another surge in US crude stockpiles and production, suggesting demand in the world’s top economy remains sluggish.
US benchmark West Texas Intermediate sank 4.6 percent — falling below $40 a barrel for the first time since August and Brent North Sea crude dived 4.4 percent.
Also on Wednesday Federal Reserve Chair Janet Yellen said she expected the US economy would continue to grow strongly enough to support a small increase in interest rates. The Fed holds its next meeting later this month.
“The decline in commodity prices is reflecting the downturn in global economic conditions, with emerging countries at the centre of that,” Mitsushige Akino, executive officer at Ichiyoshi Asset Management, told Bloomberg News.
“Yellen’s speech was as expected and showed that they plan to start normalising rates in December.”The news sent the dollar rallying on US trading floors but it reversed course in Tokyo early Friday, buying 123.29 yen from 123.81 yen in New York.
Investors are now keenly awaiting the ECB meeting later in the day that could see it unleash fresh stimulus to kickstart growth in the eurozone economy, while a US jobs report is released Friday.
In Tokyo trading, energy giant Inpex fell 1.02 percent to 1,215.5 yen. But JX Holdings ticked up 0.54 percent to 506 yen, shortly before it confirmed a merger with smaller rival TonenGeneral Sekiyu aimed at offsetting an industry downturn.
Japan’s two biggest oil refiners said they planned to merge in early 2017 with a final agreement to be announced in August.