TOKYO, March 16 (Xinhua) -- Tokyo stocks closed lower Monday as the Bank of Japan’s (BOJ) new easing measures aimed at stabilizing financial markets impacted by the spread of the coronavirus failed to impress some investors.
The 225-issue Nikkei Stock Average dropped 429.01 points, or 2.46 percent, from Friday to close the day at 17,002.04, marking its lowest closing level since November 2016.
The broader Topix index of all First Section issues on the Tokyo Stock Exchange, meanwhile, lost 25.36 points, or 2.01 percent, to finish at 1,236.34.
Trading got off to a lackluster start, local brokers said, as investors seemed largely unimpressed at the U.S. Federal Reserve’s sudden announcement of an interest rate cut to cushion the downside effects of the impact of the coronavirus pandemic.
The Fed announced that it would cut its target range for the federal funds rate by 1.00 percentage point to 0.00 to 0.25 percent, to add stability to financial markets amid the spread of the coronavirus.
Traders also largely shrugged off government data released in the morning showing that core private-sector machinery orders in Japan rose 2.9 percent in January from a month earlier, owing to an increase in orders from manufacturers.
Machinery orders are a key advance indicator for corporate capital spending, which accounts for roughly 15 percent of Japan's gross domestic product, and the government uses the data to predict the strength of business spending in a six to nine month period ahead.
Thereafter, stocks fluctuated as the market turned its attention to an emergency Bank of Japan meeting that was convened earlier than expected, at which the central bank, in turn, opted to unroll new easing measures in a bid to stabilize financial markets and combat the fallout from the pandemic.
The BOJ decided to expand its asset purchase program through the increased accumulation of of exchange-traded fund securities and corporate bonds.
The central bank decided to double its ETF purchases from the current 6 trillion yen to an annual pace of 12 trillion yen (112.82 billion U.S. dollars).
The bank also said it would increase its target bond purchases and commercial paper by 2 trillion yen (18.80 billion U.S. dollars) by September.
Japan’s central bank also announced a new policy enabling it to provide loans against corporate debt of about 8 trillion yen (75.21 billion U.S. dollars) as of the end of February as collateral at the interest rate of zero percent with maturity of up to one year.
The BOJ, however, opted not to plunge its short-term interest rates further into negative territory, past the current level of 0.1 percent, amid concerns such a move would diminish profits at commercial banks.
The central bank’s latest moves, however, left the market disappointed, mainly owing to the fact that the BOJ left its key interest rate unchanged, market analysts here said.
"Concern is growing that the virus damage will spread to such an extent that monetary policy cannot contain its impact on the economy," Shingo Ide, chief equity strategist at the NLI Research Institute, was quoted as saying.
The U.S. dollar dropping to the lower 106 yen zone after the Fed’s announcement, weighed on exporter issues, with Toyota Motor skidding down 2.4 percent, while Honda Motor reversed 3.4 percent. Nissan Motor, meanwhile, ended the day 3.5 percent lower.
By the close of play, rubber product, transportation equipment and electric appliance-linked issues comprised those that declined the most.
Issues that declined outpaced those that rose by 1,098 to 1019 on the First Section, while 49 ended the day unchanged.
On the main section on Monday, 2.345 billion shares changed hands, dropping from Friday's volume of 3.459 billion shares.
The turnover on the first trading day of the week came to 3,319.1 billion yen (31.21 billion U.S. dollars).
