Nikkei slumps as yen surges on Brexit uncertainty
On Wednesday, Japanese shares edged down, leading stock markets across the region steeply lower as a new bout of anxiety regarding Brexit risks rattled market participants.
Japanese Nikkei Stock Average dropped 1.8% because the Japanese yen kept strengthening. Elsewhere, Australian S&P/ASX 200 sagged 0.6%, South Korean Kospi decreased 1.8% and in Hong Kong the Hang Seng Index edged down 1.7%. As for Chinese Shanghai Composite Index, it sank 0.1%.
The sterling’s dip to a 31-year minimum overnight as well as comments from the Bank of England renewed concerns regarding prolonged uncertainty in the European Union. Mark Carney, BoE Governor told on Tuesday that the UK’s major bank wouldn’t be able to entirely mitigate economic pain, and it sent traders to the yen, the number one safe-haven in Asia.
Investors purchase the Japanese yen during times of market turmoil, though Japan’s strong currency can’t be for good for Japanese exporters, so traders simply dump stocks on expectations of lower earnings.