Japanese stocks headed for their worst slump since they entered a bear market a month ago, as a rout on Wall Street and a stronger yen damped demand for the nation’s major exporters.
The blue-chip 225-issue Nikkei stock average declined as much as 4%, led by chipmakers such as Renesas Electronics after Nvidia extended losses in after-hours trading on news it received a subpoena from the U.S. Justice Department. The Topix slid as much as 3.4%, with Renesas and Socionext tumbling more than 8%.
"The sharp move in Japanese equities following the U.S. selloff overnight not only highlights the link between these markets, but also the high negative correlation between the yen and local equities," said Alvin Tan, head of Asian currency strategy at Royal Bank of Canada in Singapore. "It tells you that much of the bull market in Japanese equities has been tied to a depreciating currency, for better or for worse."
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