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Tokyo stocks dive on worries about U.S. protectionism

JIJI

Stocks dived further on the Tokyo Stock Exchange on Friday after U.S. President Donald Trump’s fresh protectionist policy move triggered a sell-off on Wall Street overnight.

The 225-issue Nikkei average plunged 542.83 points, or 2.50 percent, to end at 21,181.64, after losing 343.77 points on Thursday.

The Topix index of all first-section issues closed down 31.86 points, or 1.83 percent, at 1,708.34. It shed 28.04 points the previous day.

Heavy selling hit Tokyo stocks from the outset of Friday’s trading, after the 30-issue Dow Jones industrial average tumbled over 400 points in New York on Thursday.

The U.S. market’s plunge came after Trump said he will impose tariffs of 25 percent on U.S. steel imports and 10 percent on aluminum imports.

The Nikkei average briefly lost over 630 points, with investor sentiment also dampened by the yen’s firmness against the dollar, brokers said.

The market cut its losses slightly in the afternoon thanks to short covering, they said.

Investors are worried that the Trump’s protectionist policy “could lead to global trade conflicts, battering the U.S. economy,” said Yutaka Miura, senior technical analyst at Mizuho Securities Co.

An official at a bank-affiliated securities firm said that the Tokyo market was hit by heavy selling from nonresidents who share the concerns.

Trump’s announcement “dampened investor sentiment, as stock prices had risen recently thanks to hopes for tax cuts and other growth measures” by his administration, said Hideyuki Suzuki, head of investment market research at SBI Securities Co.

Suzuki said, however, that the market looks “ready to rebound anytime.” Japanese stocks are increasingly seen as undervalued following the recent sharp falls, he added.

Losers overwhelmed winners 1,791 to 237 on the TSE’s first section, while 41 issues were unchanged.

Volume rose to 1.601 billion shares from Thursday’s 1.518 billion shares.

Export-oriented names, including automakers Toyota, Honda and Subaru as well as high-tech issues Yaskawa Electric and Fanuc, were downbeat on the stronger yen and the U.S. protectionist policy, brokers said.

Beverage producer Ito En fell 8.17 percent on a downward revision to its consolidated operating profit forecast for the year through April.

Other major losers included clothing retailer Fast Retailing and mobile phone carrier Softbank Group.

By contrast, game maker Nintendo, semiconductor-related Sumco and Tokai Carbon attracted purchases.

In index futures trading on the Osaka Exchange, the key March contract on the Nikkei average dived 510 points to 21,130.