TOKYO -- Japan's equity benchmark Nikkei Stock Average plunged during Friday afternoon trading, following news of Prime Minister Shinzo Abe's plan to resign due to his worsening health.
The Nikkei index dropped over 600 points, or 2.6%, at one point, to 22,594, hitting its lowest intraday level since Aug. 7. A broad sector of company stocks fell -- retail, electronic devices, services and telecoms.
The yen, which had been trading at about 106.70 to the dollar before the news hit, strengthened to about 106.11.
Investors rushed to dump stocks after reports about Abe stepping down. The prime minister had on two recent occasions visited Keio University Hospital in Tokyo. Abe is expected to hold a news conference this afternoon, at which time he is expected to announce his resignation.
Shares managed a rebound shortly after their sharp decline, with the Nikkei index closing 326 points, or 1.4%, lower on the day as investors awaited Abe's announcement for more details.
Naoki Kamiyama, chief strategist at Nikko Asset Management in Tokyo, said that impact to the economy and financial markets will likely be limited as Abe had "struggled to exhibit color in his response to the coronavirus and had faced a declining support rate."
It is possible that Abe's resignation could affect foreign investors' view of the Japanese market and lead to sluggish stock purchases, but, Kamiyama said, "I do not think it will lead to long-term sell-offs."