Asia markets volatile as Tokyo plunges

Tokyo stocks tumbled Thursday in a choppy day for Asian stock markets ahead of key policy meetings in the United States and Japan next week.

Traders worldwide are focusing on the central bank gatherings, hoping they will clear up some uncertainty about monetary policy in two of the world’s biggest economies.

Equity markets have been hit by volatility the past week after two Federal Reserve officials suggested US borrowing rates could rise in September, before another colleague on Monday urged caution ahead of any tightening.

The lack of clear guidance has kept investors on edge, leading to selling.

“With escalating uncertainty surrounding the US and Japan’s monetary policies, there’s a deep-rooted yearning to cut down on any long position in stocks,” Mitsuo Shimizu, deputy general manager at Japan Asia Securities Group, told Bloomberg News.

In Japan, where investors have been left disappointed by a series of weak central bank remedies or lack of action, reports that officials are considering cutting interest rates further into negative territory hammered financial firms.

Tokyo’s Nikkei ended down 1.3 percent, with exporters also weighed by a pick-up in the yen as uncertainty over the impact of a possible new rate cut sent traders into safe havens.

“Minus interest rates are supposed to make the yen weaker, but if the move triggers concerns over the potential negative impact on the overall economy, the yen could strengthen again,” Naoki Fujiwara, chief fund manager with Shinkin Asset Management, said.

Other markets swung in an out of positive territory. Sydney reversed early losses to end 0.2 percent higher, while there were also gains in Hong Kong, which added 0.6 percent following a three-day sell-off. Singapore and Wellington retreated.

Markets in Shanghai, Seoul and Taipei were closed for public holidays.

James Audiss, Sydney-based senior wealth manager at Shaw and Partners, said: “Volatility is here to stay going into the back-end of the year with central bank meetings and the US election coming up.”

The dollar bought 102.28 yen in Tokyo, down from 102.38 yen in New York and well off levels above 103 yen seen earlier Wednesday in Asia.

In early European trade London, Paris added 0.1 percent and Frankfurt was flat.