Japan's Nikkei average closed at a four-month low today as the yen hit a 14-year high against the dollar, pressuring exporters, but losses were braked by rises in resource-linked shares after gold hit a record high.
The dollar broke below 87.00 yen and fell as far as 86.29 yen on trading platform EBS, its lowest since July 1995. Investors fret about a strong yen because it eats into exporters' profits when repatriated.
But the Nikkei rose above a four-month intraday low hit in morning trade after climbing back above its 200-day moving average, prompting short-covering. Some analysts said this level may hold for a while unless the yen gains still further.
While some market players said stock market losses might be tempered because the yen was not rising as much against other currencies, others were pessimistic and said a strong yen, when combined with fears of more capital raising and policy uncertainty, would keep Tokyo shares under pressure.
The Nikkei stands 6 per cent higher this year and is hitting four-month lows on a daily basis. In contrast, the Dow and Nasdaq recently hit 13-month highs and have gained 19 per cent and 38 per cent this year, respectively.
The benchmark Nikkei fell 58.40 points to 9,383.24 after dipping as much as 1.2 per cent in morning trade, but was still clinging above its 200-day moving average at about 9,360.
The broader Topix lost 0.5 per cent to 829.56.
Market players attributed the Nikkei's relative resilience to a number of factors, including that Wall Street is closed today for the Thanksgiving holiday and the fact that the yen is not climbing as fast against other currencies.
Among exporters, Canon slid 2.1 per cent to 3,290 yen and Advantest dropped 2.5 per cent to 1,964 yen. Honda lost 1.1 percent to 2,765 yen.
Toyota slipped 1.2 per cent to 3,380 yen after it and the US government said the carmaker would fix accelerator pedals in four million cars and trucks to address a safety issue linked to bursts of sudden acceleration and deadly accidents.
But metal stocks and trading houses bucked the market trend and gained after gold prices hit record highs above $1,190 an ounce yesterday as the dollar fell sharply.
Sumitomo Metal Mining rose 1.7 perc ent to 1,470 yen and trading house Mitsubishi gained 1 per cent to 1,953 yen. Fellow trader Marubeni rose 1.5 per cent to 462 yen.
Trade was moderate on the Tokyo exchange's first section, with 1.9 billion shares changing hands compared with last week's daily average of 2.1 billion.
Declining stocks outnumbered advancing ones 866 to 680.
Reuters