Japan’s Nikkei share average fell on Wednesday morning as sliding oil prices continued to keep investors on edge, compounded by the dollar’s faltering rebound.
The Nikkei dropped 1.9 per cent to 16,728.98 in midmorning trade. The benchmark index is trading 8.5 per cent lower than its 25-day moving average of 18,274.15. A gap of 5 per cent or more indicates that the market is oversold.
US crude oil wallowed at its lowest since 2003 after the world’s energy watchdog warned the market could “drown in oversupply’’. US crude futures shed another 49 cents to a new trough at $27.97 in early trade, while Brent crude was quoted at $28.76 a barrel.
The dollar’s rebound has stalled, which has also sapped risk appetite. The dollar was at 117.24 yen at 0200 GMT after it had risen as far as 118.115 yen overnight.
Japanese stocks recovered on Tuesday after falling for three straight days, but the rebound will likely be short-lived as investors await the outcomes of central bank policy meetings this month.
“Investors do not want to take large positions now. We may not see major activities until we get some indications from central bank meetings,’’ said Isao Kubo, equity strategist at Nissay Asset Management, adding that the market will likely stay sluggish for the time being.
Both the US Federal Reserve and the Bank of Japan are due to hold policy meetings next week.
Inpex Corp fell 3.8 per cent and Japan Petroleum Exploration Co dropped 3.3 per cent.
Toyota Motor Corp shed 1.8 per cent, Honda Motor Co declined 2.0 per cent and Nissan Motor Co tumbled 3.4 per cent.
Bucking the weakness, Nippon Express Co jumped 4.6 per cent after the Nikkei business daily said that cheap crude oil prices pushed the transport company’s operating profit up 12 per cent on the year to a record high for the April-December period.
The broader Topix shed 1.6 per cent to 1,367.55, with all of its 33 subsectors in the red. The JPX-Nikkei Index 400 fell 1.6 per cent to 12,322.15.