Japan’s Nikkei share average rebounded on Monday as government officials stepped up warnings that they may intervene in currency markets to stabilise the yen after Britain voted to leave the European Union.
The Nikkei rose 1.6 per cent to 15,189.21 in midmorning trade, after diving 7.9 per cent on Friday in the wake of Britain’s historic decision.
Prime Minister Shinzo Abe said on Monday he has instructed Finance Minister Taro Aso to watch currency markets “ever more closely” and take steps if necessary.
Abe summoned Aso and Bank of Japan Deputy Governor Hiroshi Nakaso to discuss how to deal with the market turbulence caused by Brexit.
Traders said that investors remained cautious as they try to assess the impact of the Brexit on Japan’s economy in the long term, and expect the government to take necessary measures to contain any fallout.
The yen rose to a more than two-and-a-half- year high of 99.11 yen to the dollar on Friday.
“Although it’s rebounding today, we can’t tell if selling has hit the bottom yet,” said Kenji Yoshikawa, head of equity business division at Mizuho Securities. “We still don’t know if or when measures will come out, and we can’t price that in yet.”
While investors avoided investment in exporters that are sensitive to foreign exchange rates, defensive stocks such as pharmaceutical shares and food processors rallied.
Takeda Pharmaceutical Co rose 4.1 per cent, Astellas Pharma jumped 6.2 per cent, while Kikkoman Corp soared 4.9 per cent.
Automakers extended their drops, with Toyota Motor Corp falling 2.5 per cent and Nissan Motor Co shedding 2.2 per cent.