Tokyo stocks plunged to a near six-month low Friday, as U.S. President Donald Trump sparked fears of an all-out trade war after unveiling fresh tariffs against China — which in turn threatened its own measures.
Investors were also spooked by the replacement of Trump’s national security adviser H.R. McMaster with hawkish former U.N. ambassador John Bolton.
The benchmark 225-issue Nikkei average dived 4.51 percent, or 974.13 points, to 20,617.86, the lowest since Oct. 5 — marking a weekly loss of 4.88 percent.
The broader Topix index dropped 3.62 percent, or 62.45 points, to 1,664.94. It lost 4.13 percent over the week.
“Given all the factors in the market, I think you have to expect a fall of this magnitude,” said Makoto Sengoku, market analyst at Tokai Tokyo Research Institute.
“The Trump administration’s tariffs against China. Mr. McMaster leaving. There is a sense of caution towards the administration,” he said. “People are worried about a possible trade war. Those are the factors behind Japanese stocks today. The dollar has breached below ¥105. That’s also a factor driving down Tokyo shares,” he said.
The dollar dropped to ¥104.71, dipping below the 105-mark for the first time since November 2016, as investors took refuge in the safe haven Japanese currency. The drop in Tokyo trade follows steep falls in global stocks, with the Dow falling more than 700 points Thursday as investors feared that trade tensions between the world’s largest economies would escalate. In the U.S., they fled stocks and bought bonds, which sent bond prices higher and yields lower. With interest rates falling, banks took some of the worst losses.
Technology and industrial companies, basic materials-makers and health care companies also fell sharply.