Nikkei plunges over 1,200 points to below 29,000; biggest drop in 4 years

The Nikkei index ended sharply lower Friday, logging its biggest point drop since June 2016, as a spike in the yields of U.S. and Japanese long-term bonds triggered concern about market stability and possible changes to monetary easing.
The 225-issue Nikkei Stock Average ended down 1,202.26 points, or 3.99 percent, from Thursday at 28,966.01, falling below the 29,000 line for the first time since Feb 5. The broader Topix index of all First Section issues on the Tokyo Stock Exchange finished 61.74 points, or 3.21 percent, lower at 1,864.49.
The U.S. dollar moved around the 106 yen line, caught in a tug of war between buying on rising U.S. interest rates and selling over market instability concerns triggered by sharp falls in Tokyo stocks, dealers said.
Tracking U.S. long-term interest rates that hit a one-year high overnight, the yield on the benchmark 10-year Japanese government bond briefly rose to 0.175 percent, its highest level since Jan. 29, 2016, when the Bank of Japan decided to adopt a negative interest rate.
Tokyo shares lost ground throughout the day, with the Nikkei logging its largest fall since June 24, 2016, when it tumbled 1,286.33 points as Britain voted to exit from the European Union in a historic referendum.
"Both U.S. and Japanese interest rates rose too rapidly and companies that have been overvalued such as those related to high-tech, digitalization and stay-at-home demands met selling," said Toshikazu Horiuchi, equity strategist at IwaiCosmo Securities Co.
Horiuchi said the market is expected to regain its bullish tone if traders perceive the rise of the interest rates as reflecting global economic recovery, because if so, improvement in businesses would follow.
"With more people getting vaccinated and infection cases decreasing, the market is expected to lean toward optimism," Horiuchi said.
The Nikkei extended losses toward the closing of the day's session as investors locked in gains before the end of the week as well as the month, Horiuchi said.
On the First Section, declining issues outnumbered advancers 1,985 to 172, while 37 ended unchanged. Decliners were led by electric appliance, pulp and paper, and real estate issues.
Among high-tech shares, semiconductor-related companies were notably lower.
Disco sank 1,450 yen, or 4.2 percent, to 33,400 yen, Advantest plunged 710 yen, or 7.5 percent, to 8,750 yen and Screen Holdings skidded 580 yen, or 6.5 percent, to 8,300 yen.
Real estate issues were sold on fears that rising interest rates would increase their interest-bearing liabilities and hurt their earnings.
Tokyo Tatemono dropped 78 yen, or 4.9 percent, to 1,511 yen, Mitsubishi Estate shed 79.00 yen, or 4.1 percent, to 1,838.00 yen, and Sumitomo Realty & Development declined 184 yen, or 4.8 percent, to 3,670 yen.
Trading volume on the main section rose to 1,688.76 million shares from Thursday's 1,460.95 million shares.

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