Japanese stocks tumbled, with the Topix index posting its worst opening day to a year since 2008, as the yen jumped after Chinese factory data disappointed investors, while tension in the Middle East sent crude oil and energy shares higher.
The Topix sank 2.4 percent to 1,509.67 at the close in Tokyo, capping its biggest loss since Sept. 29. The Nikkei 225 Stock Average dropped 3.1 percent to 18,450.98. The yen strengthened 1 percent to 119.37 per dollar, the highest since October, after a gauge of Chinese manufacturing missed economist estimates. Crude oil surged after Saudi Arabia expelled the Islamic Republic’s diplomats from the country following an attack on its embassy in Tehran to protest the Saudis’ execution of a Shiite cleric.
“We were starting to see signs that the economic slowdown in China had run its course, but today’s data is a disappointment,” said Masayuki Otani, Tokyo-based chief market strategist at Securities Japan Inc. ““The Saudi Arabia and Iran issue might be good for oil, but the increase in geopolitical risk means it’s an overall negative for the financial markets."
The Caixin China Manufacturing PMI index decreased to 48.2 last month, below economist estimates for 48.9. That followed official figures released Friday which showed the PMI edging up to 49.7, also below estimates for 49.8. Numbers below 50 indicate deterioration.
Middle East Tension
West Texas Intermediate crude rose 2.2 percent on the first trading day of the year after tumbling more than 30 percent in 2015. Saudi Foreign Minister Adel al-Jubei announced the expulsion of Iran’s diplomats after Iranian protesters set the Saudi embassy on fire following the execution of Nimr al-Nimr, a critic of the kingdom’s treatment of its Shiite minority. The move marks the worst crisis in relations between the nations since the late 1980s.
Energy explorers and fuel refiners were the only two sections to advance on Monday among the Topix’s 33 industry groups, with oil explorer Inpex Corp. jumping 2.2 percent.
E-mini futures on the Standard & Poor’s 500 Index fell 0.8 percent after the underlying measure lost 0.9 percent on Dec. 31, sending it down 0.7 percent for 2015, its worst year since 2008.
In contrast, Japan’s Topix climbed 9.9 percent last year, its fourth straight year of gains, to be one of the best- performing markets in dollar terms. Strategists see the index climbing 16 percent to 1,800 in 2016.
The stronger yen hurt exporters on Monday, with Honda Motor Co. slumping 4.6 percent. TDK Corp., an electronic components maker that gets more than 90 percent of sales abroad, dropped 3.2 percent.
Metals producer Dowa Holdings Co. slumped 4.1 percent after an explosion at a plant on Sunday killed two workers, according to Asahi.
Takata Corp. surged 14 percent after the Sankei newspaper reported Japanese automakers are considering aid for the troubled airbag manufacturer to safeguard access to its technology. The newspaper’s report cited unidentified people.
Toshiba Corp. climbed for a fourth session, adding 2 percent, on media reports that buyers may be interested in the firm’s assets. Shares of the accounting scandal-ridden firm surged more than 15 percent in the final three days of 2015, paring its annual losses to 51 percent.
--With assistance from Adam Haigh and Yuko Takeo.
To contact the reporters on this story: Yuji Nakamura in Tokyo at ynakamura56@bloomberg.net; Nao Sano in Tokyo at nsano3@bloomberg.net To contact the editors responsible for this story: Sarah McDonald at smcdonald23@bloomberg.net John McCluskey
