Tokyo stocks tumbled Tuesday in a global stock rout with the Nikkei index posting its biggest decline since June 2016 on panic selling after the steepest single-day point drop on Wall Street overnight.
The 225-issue Nikkei Stock Average ended down 1,071.84 points, or 4.73 percent, from Monday at 21,610.24. The decline was the largest since the index dropped 1,286.33 points in June 2016 and the closing level was its lowest since Oct. 23.
The broader Topix index of all First Section issues on the Tokyo Stock Exchange finished 80.33 points, or 4.40 percent, lower at 1,743.41.
Every industry category in the main section lost ground, led by metal product, nonferrous metal and rubber product issues.
Foreign investors, who accounted for nearly 70 percent of trading on the Tokyo bourse, unloaded Japanese stocks to make up for losses from U.S. stocks as well as on U.S. Treasurys, brokers said.
Market players dumped stocks in panic after seeing the Dow Jones Industrial Average mark its biggest-ever daily point loss and U.S. 10-year Treasury yields rose sharply, said Maki Sawada, vice president of the investment research and investor services department at Nomura Securities Co.
"The sell-off accelerated in a chain reaction," she said.
Share losses briefly widened in the afternoon with the Nikkei dropping as much as 1,603.37 points, the biggest point fall in about 17 years and 10 months, prompted by a further drop in U.S. stock futures and weak Asian markets.
"Selling accelerated as Dow futures extended declines (during Tokyo trading hours) and concerns grew that U.S. equities will continue to fall tonight," said Makoto Sengoku, a market analyst at the Tokai Tokyo Research Institute.
Investors had cheered stock markets' "Goldilocks" environment -- solid economic expansion, improving corporate earnings and relatively low long-term interest rates. But share prices saw large falls recently as the upward trend changed, triggered by the surge in U.S. Treasury yields.
"It's difficult to say whether the recent stock losses will affect real economies quickly, but investor sentiment actually cooled," Sengoku said, adding he is concerned about the economic growth outlook and a possible slowdown in domestic consumption if shares continue to fall.
"But I think the sell-off was a not-bad position adjustment as prospects grew that the Bank of Japan will persistently carry out its monetary easing policies" to support the market, Sengoku said.
The central bank buys exchange-traded funds when shares decline as one of its easing-policy measures. The BOJ's purchase of 73.1 billion yen worth of ETFs on Tuesday helped the Tokyo market pare some losses toward the close.
Meanwhile, Nomura Securities' Sawada said the downward trend is expected to be short-lived. "The recent nosedive is not expected to last long as economic growth and domestic earnings remain solid," she said.
Declining issues outnumbered advancers 2,027 to 35 on the First Section, while three ended the day unchanged.
Losses were seen across multiple sectors, including financials and technology issues.
Among blue chips, SoftBank Group fell 431 percent, or 4.9 percent, to 8,369 yen, Fast Retailing sank 2,540 yen, or 5.5 percent, to 44,000 yen. Mitsubishi UFJ Financial Group lost 30.30 yen, or 3.7 percent, to 790.60 yen.
Automakers were hurt by the yen's firmness against the U.S. dollar as heavy selling in stock markets triggered risk aversion. Toyota Motor fell 215 yen, or 2.9 percent, to 7,286 yen and Hino Motors declined 87 yen, or 5.7 percent, to 1,433 yen.
Bucking the downward trend, Maruha Nichiro rose 120 yen, or 3.8 percent, to 3,255 yen after the fishery company revised upward its net profit estimates Monday for the business year ending next month.
Trading volume on the main section jumped to 3,155.71 million shares from Monday's 1,881.89 million shares.