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Nikkei slides 234 points as Trump’s 25% tariff threat sparks Shanghai sell-off

JIJI

Stocks sank Thursday in response to a sell-off in Shanghai sparked by renewed concerns over the U.S.-China trade war.

The 225-issue Nikkei average lost 234.17 points, or 1.03 percent, to end at 22,512.53 on the Tokyo Stock Exchange after jumping 192.98 points on Wednesday.

The Topix index of all first-section issues was down 17.67 points, or 1.00 percent, at 1,752.09, after adding 16.47 points the previous day.

The Tokyo market opened lower following a retreat in U.S. equities overnight and the yen’s strengthening against the dollar, brokers said.

After recouping their early losses, both the Nikkei and Topix again came under selling pressure and sank deep into negative territory in the afternoon.

Investor sentiment was dampened by a sharp fall in Shanghai stock prices that came on the heels of an announcement by the administration of U.S. President Donald Trump in Washington on Wednesday that it will consider jacking up the tariff planned for $200 billion worth of Chinese imports to 25 percent instead of the initially proposed 10 percent, brokers said.

Drops in U.S. stock futures in off-hours trading also weighed on the Tokyo market, they said.

“Investors had no choice but to react to such a substantial fall (by over 2 percent) in Shanghai shares,” said Chihiro Ota, general manager for investment research and investor services at SMBC Nikko Securities Inc.

Market sentiment deteriorated sharply in the afternoon, with China-related issues dumped and index futures-linked selling gathering steam, traders said.

“The Nikkei average’s topside would continuously be capped by international trade tensions,” a major brokerage house official said.

Players are likely to concentrate on selective trading for the time being while closely watching issuer firms’ earnings performances, the official forecast.

Falling issues outnumbered rising ones 1,509 to 509 in the TSE’s first section, while 85 issues were unchanged.

Volume fell to 1.642 billion shares, from 1.767 billion shares on Wednesday.

Kobe Steel tumbled 9.60 percent after posting sharply lower operating and net profits for the April-June quarter stemming from a product data manipulation scandal.

Mazda sagged 3.51 percent on dismal results for the fiscal 2018 first half.

Other major losers included construction machinery maker Komatsu, oil firms Inpex and JXTG, and mobile phone carrier KDDI.

On the other hand, Konica Minolta gained 3.66 percent thanks to its strong earnings in April-June and rosy profit prospects for the fiscal year.

Also higher were paper manufacturer Oji Holdings, automaker Isuzu and chemical producer Asahi Kasei.

In index futures trading on the Osaka Exchange, the key September contract on the Nikkei average lost 270 points to end at 22,510.