Tokyo shares drop as yen strengthens on Fed dour view; carmakers crash

  • Reuters
  • Stock Market News
Tokyo shares drop as yen strengthens on Fed dour view; carmakers crash
Credit: © Reuters.

SYDNEY, June 11 (Reuters) - Japanese shares dropped on Thursday, with automakers and financials leading the declines, as the yen firmed after the U.S. Federal Reserve made no policy changes in the first economic projections of the pandemic era.

The benchmark Nikkei average .N225 dropped 1.1% to 22,882.28 by the midday break, further off its 3-1/2-month high touched earlier in the week.

Fed on Wednesday signalled it plans years of extraordinary support for the U.S. economy facing a pandemic-induced recession. Fed Chair Jerome Powell said he was "not even thinking about thinking about raising rates" and that policy would have to be proactive with rates near zero out to 2022. pressured rate-sensitive financial stocks. Dai-ichi Life Holdings 8750.T shed 4.8%, while Mitsubishi UFJ Financial Group (MUFG) 8306.T slid 3.9%.

In the currency market, the risk of more easing kept the U.S. dollar under pressure, seeing it skid to a one-month low versus the yen to trade at 106.90 yen JPY=EBS .

As a firmer yen hurts Japanese manufacturers' profits made abroad when repatriated, shares of export-oriented automakers came under pressure, with Nissan Motor 7201.T tumbling 5.1% and Honda Motor 7267.T diving as much as 4.2%.

The broader Topix .TOPX lost 0.9% to 1,610.73 by the midday recess, also off its highest level since Feb. 21 touched earlier this week, with all but two of the 33 sector sub-indexes on the Tokyo exchange trading lower.

Highly cyclical sea transport .ISHIP.T , mining .IMING.T and iron and steel .ISTEL.T were the worst three performing sectors on the main bourse.

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