Tokyo: Stocks in Tokyo continued their downward course on Friday, with the Nikkei plunging below the psychologically significant mark of 9,000 points for the first time in more than five years.
A drop in the opening minutes came after US stocks plummeted on Thursday. At mid-morning the benchmark Nikkei 225 Stock Average plunged 974.12 points, or 10.64 per cent, to 8,183.37.
Earlier, the Nikkei had fallen 1,042.08 points, or 11.38 per cent, to 8,115.41.
The broader Topix index of all first-section issues shed 75.20 points, or 8.31 per cent, to 829.91 in morning trading.
This was a reaction to US stocks plummeting again Thursday, with the Dow Jones Industrial Average dropping below 9,000 points for the first time in five years, as a series of US and global efforts to tackle the financial crisis have failed to calm investors.
Both the blue-chip Dow and broader Standard & Poor's 500 tumbled more than 7 per cent. The Dow dropped 678.91 points, or 7.33 per cent, to 8,579.19. The S&P fell 75.02 points, or 7.62 per cent, to 909.92.
On currency markets the dollar traded weaker at 99.02-07 yen, down from Thursday's 5 p.m. quote of 101.16-18 yen.
The euro was quoted at $1.3558-63, down from late Thursday's quote of $1.3734-35, and at 134.27-37 yen, down from 138.94-98 yen.
Asian stocks plunged on Friday, with Japan's Nikkei down more than 10 per cent, while the yen and US Treasuries rose, as panic ripped through markets and investors shrugged off efforts so far to unlock credit markets.
A synchronised cut in borrowing costs by central banks around the world this week is seen as too little, too late, and investors doubt a meeting of the Group of Seven rich nations later on Friday can achieve much, with fears growing that the global economy is shifting towards recession.
US government debt and the yen have become refuges from the worsening financial crisis that overnight knocked the US S&P 500 stocks index down 7.6 per cent to a 5-year low.
But cash was ultimately king, with even Japanese government bonds being liquidated for funding.
Fears of a looming world recession that would sap demand for raw materials dragged oil prices down to a 12-month low below $84 a barrel. "No one is buying. Fundamentals don't matter any more and there's no explanation for such a plunge," said Yoshinori Nagano, chief strategist at Daiwa Asset Management in Tokyo, of the selloff in Japanese stocks. The Nikkei share average was down 10.6 per cent, bringing the week's losses to more than 20 per cent.
Unlisted Yamato Life Insurance Co filed for bankruptcy protection because of market turmoil, shocking investors who had thought Asia's financial sector, especially Japan's, was relatively stable compared with Europe and the United States.
The MSCI index of Asia-Pacific stocks excluding Japan was down 5.7 per cent to the lowest since June 2005, and has fallen 19 per cent this week alone. Singapore's Straits Times index fell more than 7 per cent, its seventh consecutive day of falls, after data confirmed one of Asia's richest economies was in a recession.
The Chicago Board Options Exchange's Volatility index (VIX), seen as a fear index, hit an all-time high of 64.92, as investors scrambled to buy increasingly expensive protection against erratic price action. With global equity markets declining with brutal swiftness, investors have rushed to US Treasury debt despite weakness in recent days on expectations for a glut of new issuance.
The 10-year note rose 21/32 in price, taking its yield to 3.70 per cent from 3.78 per cent. Rates on one-month T-bills fell to just 0.045 per cent, from 0.080 on Thursday and 1.55 per cent as recently as Sept. 11, as the very short end of the market continued to act as a source of funding with other avenues all but shut down.
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