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Tokyo stocks tumble as Fast Retailing plunges on lower profit forecast

AFP

Tokyo stocks fell sharply in early trading on Friday as market heavyweight Fast Retailing plunged nearly 10 percent after forecasting a big profit decline for the current fiscal year.

The operator of casual fashion brand Uniqlo said late Thursday it expected that full-year to August profit will be down 45.5 percent as a stronger yen erodes the value of overseas earnings and warmer-than-expected weather dents demand for its popular thermal underwear.

Fast Retailing slumped 9.44 percent to 27,610 yen about 40 minutes after the opening bell on Friday, helping push Tokyo's benchmark index deeply in negative territory.

The Nikkei 225 fell 1.64 percent, or 259.04 points, to 15,490.80 points, while the broader Topix index of all first-section shares lost 1.67 percent, or 21.24 points, to 1,251.40.

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A weak lead from Wall Street and ongoing yen strength weighing on exporters also hurt market sentiment, analysts said.

"Japanese markets will start with a big drop as we can't see a bottom for the dollar-yen," Juichi Wako, a senior strategist at Nomura Holdings, told Bloomberg News.

"One possible line in the sand is the 105 level, which is where it traded before the BOJ added to easing."

US shares fell on Thursday, with large banks falling especially hard as the market girds for a tough first-quarter earnings season.

In New York, big finance houses sold off on prospects of a continuing dovish stance by the Federal Reserve as depicted in the minutes of its last meeting released Wednesday.

On Wall Street, the Dow closed 1.0 percent lower, while the S&P 500 slumped 1.2 percent and the Nasdaq dropped 1.5 percent.

In forex markets, the yen continued trading at its highest level against the dollar in around 17 months.

The greenback rose to 108.58 yen from 108.35 yen in New York, but was down from 108.70 yen earlier on Thursday in Tokyo, erasing most of its gains since the Bank of Japan last expanded its asset buying programme in October 2014.

dhl/kgo/fa