Tokyo shares turn tail after early rise as Brexit's Leave camp makes gains

The Nikkei 225, which had opened higher, dramatically reversed course and slumped as much 2.96 per cent to 15,757.37 in morning trade.
The Nikkei 225, which had opened higher, dramatically reversed course and slumped as much 2.96 per cent to 15,757.37 in morning trade. PHOTO: AFP

TOKYO (AFP) - Tokyo's benchmark index plunged nearly 3 per cent in volatile trade Friday (June 24) as early results in Britain's European Union membership vote pointed to stronger-than-expected support for exiting the bloc.

The Nikkei 225, which had opened higher, dramatically reversed course and slumped as much 2.96 per cent, or 480.98 points, to 15,757.37 in morning trade, while the Topix index of all first-section shares tumbled 3.03 per cent, or 39.29 points, to 1,259.42.

Both indexes later pared those losses, with the Nikkei down 0.59 per cent and the Topix off 0.84 per cent by 10.30 am local time (9.30am Singapore time).

Tokyo's initial gains had extended a rise on Wall Street and in Europe overnight after traders grew increasingly confident that Britons would decide against pulling out of the 28-nation bloc.

But early results on Friday from Sunderland in the north-east showed voters there had opted to leave the EU by a significant margin - 61 per cent against 39 per cent in favour of staying.

That came after news that nearby Newcastle had seen a smaller-than-forecast win for Remain.

"Investors are busy alternating between hope and despair, every time poll results are updated," Mr Hideyuki Suzuki, head of the investment information research department at SBI Securities, told AFP.

"If the Remain camp is victorious, stocks will rally instantly as those who stayed away from trading will jump back into the market. If the Leave camp wins, shares will plunge at first, but I think they'll settle down pretty quickly."

In forex markets, the yen surged - usually a negative for Japanese shares - in response to the initial vote results. Japan's currency briefly soared nearly 3 per cent on the US dollar to just above 103 - its highest levels since 2014 - as traders flocked to the safe-haven currency.

Investors tend to buy the yen in times of uncertainty and turmoil. Japanese exporters were among the main losers on Friday, as the stronger yen sharply hit demand for their shares.