Tokyo Stocks Edge Lower Amid Volatile Trading : Japan: The Nikkei average falls in the morning, recovers in the afternoon but dips 14.53 at the close.
Prices on the Tokyo Stock Exchange, which posted its second-largest single-day gain Monday, finished off 14.53 points today after a volatile trading day.
The Nikkei stock average of 225 selected issues, which gained 528.82 points last Friday and surged 1,468.33 points, or 4.83%, Monday, opened up 54.28 points today.
The yen continued its plunge.
Foreign brokers, however, jumped in with sell orders tied to a futures index and pushed prices down again to 31,493.78 at the lunch break. In the afternoon, the Nikkei average recovered but then faltered again, closing off 0.05% from Monday at 31,825.96.
Monday’s gain was second only to the 2,037.32-point rise on Oct. 21, 1987, when share prices rebounded from the worldwide “Black Monday” stock plunge, and it brought at least a pause to Japan’s extended 1990 “Black Monday,” which began at the beginning of the year.
At its momentary low for the year at 28,830 last Thursday, the Nikkei average had plummeted by 26%, compared to a 21% decline in 1987.
Dealers attributed the market’s renewed enthusiasm Monday and today to the impending start of the 1990 fiscal year this Sunday and a reaction to last Thursday’s deep plunge in prices. Beginning today, contracts are counted as part of the new business year.
Trading Monday marked the first time since turmoil on the Tokyo markets began that the fall in the yen’s value had not affected stock prices.
But today, the continuing decline in the yen’s value again was blamed for part of the stock dip.
After plummeting 1.33 points Monday, the yen opened today at 156.90 to the dollar, another 0.50-point drop.
As the dollar moved above 157 within the first hour of trading, the Bank of Japan was reported to have intervened once again in an attempt to halt the decline. Since late February, the central bank, fearful that the yen’s decline would spur inflation by raising the costs of imported raw materials, is reported to have spent more than $10 billion in a futile bid to prop up the currency, including nearly $1 billion Monday.
Disappointment over Friday’s talks in Los Angeles between Treasury Secretary Nicholas F. Brady and Finance Minister Ryutaro Hashimoto caused the renewed slide for the yen, analysts said.
After their talks, the two finance chiefs issued a statement that failed to mention any new move to prop up the yen. And in a TV interview Sunday, Brady said that he thought trading in the dollar on foreign exchange markets had been stable for the last two years.
Hashimoto told reporters today that it was “premature” to call his meeting with Brady ineffective. He suggested that the yen is declining against the dollar because of the traditional “flight-to-stability” factor--the idea that in time of political uncertainty or tensions, investors and money markets seek dollars because of the United States’ political stability. He cited tensions in the Soviet Union over Lithuania.
Akira Okuhata, director of the Bank of Tokyo’s exchange funds division, however, said the failure of the U.S. Federal Reserve to intervene in markets Monday to slow the dollar’s climb contributed to today’s yen decline.
Tadashi Arai, a director of Nippon Kangyo-Kakumaru Securities Co., said that the stock market had already “digested a possible further weakening of the yen.”
Japan’s economy, he added, should remain “relatively unscathed” even if the yen falls to 160 to the dollar.
He called today’s decline a normal correction to Monday’s surge.
