Japanese stocks fell to their lowest level in a month as the Nikkei 225 Stock Average slumped on speculations about further surging of the already strong yen.
The reports about easing of the U.S. monetary policy further ebbed investors' confidence. Automakers bore the biggest brunt of the slump as their shares dropped significantly lower. Toyota Motor Corp., the world’s largest automaker, lost up to 1.5 percent with Honda Motor Co., Japan's second largest, losing 2 percent of stock value; Nissan Motor Co., the third-largest carmaker of Japan, dipped 1.8 percent to close at 727 yen.
The markets were closed on Monday due to a national holiday and the first day of the week started on a low. The Nikkei 225 dropped 2.1 percent to close at 9,388.64, the biggest slump since Sept. 8 with the Topix index declining 1.8 percent to close at 824.60, with about 20 stocks dropping for each that surged.
The Topix has declined by up to 9.1 percent in 2010, which is troubling for the investors as the S&P 500 has risen 4.5 percent and Stoxx Europe 600 Index has surged 3.7 percent in the same period. There is also a difference in stock valuation as in the Japanese benchmark; they are valued at 14.7 times estimated earnings, higher than 13.9 times for the S&P, and 12.1 times for the Stoxx.
The dollar dropped 81.39 yen yesterday, which is the lowest level since April 1995. The greenback dipped 81.81 yen today, compared with the previous low of 82.37 at the end of stock trading on Oct. 8.
