Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: MONDAY, April 2, 1990 TAG: 9004020375
SECTION: NATIONAL/INTERNATIONAL PAGE: A2 EDITION: EVENING
SOURCE: Associated Press
DATELINE: TOKYO LENGTH: Medium
Analysts said both markets were shaken by a report in Japan's top financial newspaper that major life insurance companies planned to shift funds out of the stock market.
The drop in stock prices helped spark a decline on stock markets in London and several Far Eastern cities. Prices also fell somewhat in New York, where the Dow Jones industrial average was down about 18 points at 11 a.m. EDT.
In London, analysts said the plunge in Tokyo and violent riots against a new per-capita tax sent prices sharply lower. At midday, the Financial Times-Stock Exchange 100-stock index was 32.3 points, or 1.4 percent, lower at 2,215.6.
In New York, the Dow Jones average of 30 industrials dropped 18.02 to 2,689.19 by 11 a.m. Losers outnumbered gainers by more than 5 to 1 in nationwide trading of New York Stock Exchange-listed issues, with 210 up, 1,143 down and 390 unchanged.
Volume on the Big Board came to 41.39 million shares at midmorning.
In its lead front-page story, the Nihon Keizai Shimbun newspaper said major insurance firms, including Dai-ichi Mutual Life Insurance Co., Nippon Life Insurance Co. and Sumitomo Mutual Life Insurance Co., planned to sell large blocks of shares because the ratio of their stock holdings to their total assets was approaching the upper limit of 30 percent set by the Finance Ministry.
The Finance Ministry and at least one insurer denied the report, which nevertheless supported market expectations that major investors would generally move out of the stock market and into bonds, said Jason James, strategist at James Capel Pacific Ltd.
The Nikkei Stock Average of 225 selected issues today shed 1,978.38 points, or 6.59 percent, to 28,002.07, its second-largest single-day decline ever.
On Friday, it lost 1,045.71 points, or 3.37 percent, in the market's seventh-largest single-day decline.
Analysts said the decline in the stock market helped push the dollar higher, and the relative weakness of the yen then pushed share prices even lower.
In London, analysts said the plunge in Tokyo and violent riots against a new per-capita tax sent prices sharply lower. At midday, the Financial Times-Stock Exchange 100-stock index was 32.3 points, or 1.4 percent, lower at 2,215.6.
Stock prices closed lower in Australia, Hong Kong, the Philippines, New Zealand, South Korea and Singapore, largely in reaction to the dismal Tokyo performance.
In the Tokyo currency market, the dollar closed at 159.95 yen, up 2.30 yen from Friday's close of 157.65 yen. It opened at 159.97, up 2.32 yen, and ranged between 159.70 and 160.35.
About 30 minutes after trading began, the dollar was trading between 160.10 yen and 160.20 yen, the first time the currency has traded in the 160-yen range since December 1986.
"People had already taken their positions by the time the report was denied, and anyway people were expecting [the shift away from stocks] to come sooner or later," said Kaneo Ogino of Goldman Sachs (Japan) Corp.
The speed and extent of the dollar's rise took many market players by surprise, dealers said.
"Traders were looking at 160.40 yen as a medium term objective over the next few weeks. Many people were surprised when we reached the target today," said Mahiko Nagai, an assistant vice president of foreign exchange with Manufacturers Hanover in Tokyo.
by CNB