Tokyo stocks close 2.45pc lower after US stimulus cut

Tokyo stocks tumbled 2.45 per cent on Thursday as the market was dragged down by worries over emerging markets, after the US Federal Reserve further scaled back its stimulus programme.

The benchmark Nikkei-225 index slumped 376.85 points to 15,007.06 – wiping out its 2.70 per cent gain on Wednesday. The Topix index of all first-section shares fell 2.55 per cent, or 32.09 points, to 1,224.09.

“The turmoil in emerging markets does not look like it’s close to dying down,” Yoshihiro Okumura, general manager at Chibagin Asset Management, told Dow Jones Newswires.

“While the continuation of the Fed’s tapering programme implies higher US interest rates, a stronger dollar and a weaker yen – all of which are fundamentally positive for Japan stocks – the ‘risk-off’ investor mood and jolt to the world’s growth markets is trumping these facts.”

The Fed said on Wednesday it would reduce its monetary easing programme by US$10 billion a month to US$65 billion, following a similar move announced in December.

Investors grew cautious after the announcement, which stoked fears of a capital flight from emerging markets as dealers look for safer investments back home.