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Japan Nikkei dives 6.1% amid worsening virus fears

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The Japan share market closed session at lowest level in over three years on Friday, 13 March 2020, joining global risk-off selloff amid mounting fears of the economic impact of the novel coronavirus and fears of a world recession. At closing bell, the 225-issue Nikkei Stock Average stumbled 1,128.58 points, or 6.08%, to 17,431.05, its lowest closing level since Nov. 11, 2016. The broader Topix index of all First Section issues on the Tokyo Stock Exchange sank 66.18 points, or 4.98%, at 1,261.70. The index fell 16% over the tumultuous week.

The sell-off in the Tokyo stock market followed another plunge on Wall Street overnight, with the Dow Jones Industrial Average posting its biggest percentage fall since the 1987 Black Monday crash as the U. S. travel ban from some European countries caused concerns over the impact of the virus on global businesses. In Europe, stocks in Britain and Germany also dropped 10% or more.

The selloff market marked the greatest manifestation yet of how the one-two punch of the coronavirus and an oil-price war are destroying global growth prospects and fueling jitters around the world. Now investors are trying to guess at the effectiveness of policy makers' efforts to limit economic damage, with Trump's travel ban and tepid fiscal measures failing to impress most observers. Spirits were further damped by new bans on public gatherings in the U. S. and professional sports leagues' move to suspend operations.

The Fed said it would inject $1.5 trillion into the short-term lending markets that banks use to lend to each other on Thursday and Friday. The central bank also announced it will buy $60 billion worth of Treasury bonds for the next month (March 13 through April 13) to help keep that market functioning appropriately. But it did little to reassure traders, who were apparently dismayed by the lack of concrete plans from President Donald Trump in his address Wednesday night and announcement that he would restrict nearly all travel from Europe for 30 days to stem the spread of the coronavirus, and disappointed that Congress has not yet come to an agreement on a wide-ranging aid bill.

Sentiment was also dampened by U.

S. President Donald Trump's remark on Thursday that officials should consider postponing this summer's Tokyo Olympic Games for one year. The leading U. S. infectious-disease official said the testing system in the country is a failing. The National Hockey League followed the National Basketball Association's lead and suspended its season, while Major League Baseball said opening day would be delayed. The European Union warned the sickness threatens to exceed health-care capacity across the region in a few weeks or even days.

The Tokyo market shrugged off the Bank of Japan's offer to inject 500 billion yen ($4.8 billion) into the financial system through Japanese government bond purchases to cushion the impact of the viral outbreak. The market rout prompted the Ministry of Finance, the Financial Services Agency and the BOJ to hold an emergency meeting to discuss the situation. The government and BOJ officials reaffirmed that they will continue to closely monitor markets and take appropriate action as needed to ensure the stability of the financial system.

Export related shares were sharply lower across the board, with Toyota dropping 3.56% to 6,084 yen, game giant Nintendo down 4.6% at 33,220 yen, and telecom and investment titan SoftBank Group falling 5% to 3,764 yen.

Banks were also lower, with Mitsubishi UFJ Financial losing 5.1% to 397.1 yen and Sumitomo Mitsui Financial off 5.4% to 2,644 yen.

ECONOMIC NEWS: Japan Tertiary Industry Activity Rises 0.8% On Month In January- Japan's tertiary industry activity index rose 0.8 percent month-on-month in January, data from the Ministry of Economy, Trade and Industry showed on Friday. Among the major industries, retail trade, living and amusement-related services, business services, real estate business, transport and postal activities, information and communication industry, and financial and insurance increased in January. Meanwhile, electricity, gas, heat supply, water supply, wholesale trade, medical, health care and welfare, and goods rental business declined. On a yearly basis, tertiary industry activity declined 1.1 percent in January.

CURRENCY NEWS: The Japanese yen, often seen as a save-haven in times of economic uncertainty, traded at 105.47 yen in Asian trade, against 104.79 yen in New York on Thursday.

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(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

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First Published: Fri, March 13 2020. 19:23 IST