Japanese stocks fell on Thursday after the yen spiked to a five-month high against the US dollar overnight, with investors seeking to trim riskier bets amid growing concerns about the health of the global economy.
Japan's Nikkei average fell 0.5 per cent, touching a near two-month low and down for a seventh straight day.
"It is mostly about the yen today. The stock market is on the backfoot as the currency not only sliced below the 94 yen threshold but went on to advance below 92 yen. This is not good news for exporters," said Yumi Nishimura, a deputy general manager at Daiwa Securities SMBC.
MSCI's measure of stocks elsewhere in the Asia-Pacific was barely moved, clinging to gains of more than 27 per cent so far this year.
Doubts about the prospects for a swift and strong recovery also weighed on oil prices, which tumbled more than 4 per cent on Wednesday, but other Asian stock markets steadied after a late rally on Wall Street.
"As optimism over the outlook for the global economy had gone too far, such a view has been fading. It will take a while before we see the economy recover," said Akitsugu Bandou, a senior economist at Okasan Securities.
The US dollar and the euro both fell more than 2 percent against the yen on Wednesday, posting their sharpest one-day drops since March.
The rise in the yen, which benefits from risk aversion trades, was exacerbated by automatic US dollar sell orders that kicked when it fell through 94 yen, traders said.
Reuters
