Nikkei index sinks 3% at opening on U.S. economy concerns

Tokyo stocks were sharply lower Wednesday morning, with the Nikkei index briefly sinking over 4 percent, as weaker-than-expected U.S. manufacturing data and falls in U.S. technology shares hurt sentiment.

The 225-issue Nikkei Stock Average fell 1,280.72 points, or 3.31 percent, from Tuesday to 37,405.59. The broader Topix index was down 75.69 points, or 2.77 percent, at 2,657.58.

The U.S. dollar remained weak in the lower 145 yen range as the yen, seen as a safe-haven asset, was bought as the Japanese stock market plunged, dealers said.

At noon, the dollar fetched 145.45-46 yen compared with 145.42-52 yen in New York and 145.93-96 yen in Tokyo at 5 p.m. Tuesday.

The euro was quoted at $1.1052-1053 and 160.75-78 yen against $1.1038-1048 and 160.75-85 yen in New York and $1.1055-1056 and 161.34-38 yen in Tokyo late Tuesday afternoon.

A wide range of issues were sold throughout the morning, led by heavyweight chip-related shares such as Tokyo Electron and Advantest that tracked overnight declines by their U.S. counterparts.

The Nikkei index at one stage dropped over 1,500 points, hitting its lowest intraday level in around three weeks, additionally weighed down by the yen’s strength against the U.S. dollar.

Weaker-than-expected Institute for Supply Management purchasing managers’ index data for the U.S. manufacturing sector in August renewed fears of a potential recession in the world’s largest economy.

“The weak data has ignited concerns regarding a slowdown in the U.S. economy, making market participants more cautious about the upcoming U.S. services data and unemployment data later this week,” said Koichi Fujishiro, senior economist at the Dai-ichi Life Research Institute.

The economic data is likely to determine the size of an expected interest rate cut, whether it will be a 0.25 or a 0.50 percentage point cut, at the U.S. Federal Reserve’s meeting later this month, he added.

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