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Japan’s Nikkei share average dropped to a more than two-week low on Tuesday as investors were worried that a fresh rout in Chinese shares would damage China’s economy and as commodity prices tumbled.
The Nikkei share average fell 1.1 per cent to 20,132.12 by mid-morning after falling to as low as 20,070.62, the lowest level since July 13.
The dollar was under pressure as China jitters spurred flows into safe haven assets such as the yen, while commodities, including oil and copper, weakened amid fears of a collapse in demand from China if the stock market rout damages the broader economy.
“Just like investors unwind their positions in the dollar and commodities, they avoid all risky assets, including stocks,’’ said Nobuhiko Kuramochi, a strategist at Mizuho Securities.
Market observers said that investors will stay jittery and see how China’s regulators will try to counter the rout.
Beijing intervenes
After Chinese stocks plunged more than 8 per cent on Monday, the country’s top securities regulator said Beijing would keep buying shares to stabilise the market as an unprecedented rescue plan already in place appeared to sputter.
China-related stocks underperformed, with construction equipment makers Komastu Ltd and Hitachi Construction Machinery falling 2.5 per cent and 2.7 per cent, respectively.
Shippers Mitsui O.S.K. Lines shed 2.3 per cent, while Kawasaki Kisen Kaisha declined 2.6 per cent.
Exporters were lower as the dollar fell as low as 123.010 yen in the previous session before it traded flat on the day at 123.260 yen.
Fed policy meet
Traders said investors were risk averse amid worries about China and ahead of a two-day US Federal Reserve’s meeting beginning later in the day.
Toyota Motor Corp shed 1.5 per cent and Honda Motor Co fell 1.8 per cent.
Outperforming the market was ANA Holdings, which rose as high as 2 per cent earlier after the Nikkei business daily reported that its April-June operating profit likely rose to the highest in seven years.
The broader Topix dropped 1.1 per cent to 1,619.76 and the JPX-Nikkei Index 400 shed 1.2 per cent to 14,610.10.
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