Business / Financial Markets

Tokyo stocks drop on renewed U.S.-China trade jitters

Kyodo

Tokyo stocks sank Tuesday after an extended Golden Week, with China-linked shares sold amid renewed U.S.-China trade tensions.

The Nikkei 225 average ended down 335.01 points, or 1.51 percent, from April 26 at 21,923.72. The market had been closed during the unprecedented 10-day holiday through Monday that was extended to celebrate new Emperor Naruhito’s enthronement. The broader Topix finished 18.09 points, or 1.12 percent, lower at 1,599.84.

Decliners were led by mining, machinery, and glass and ceramics product issues.

Shares were weak throughout the first trading day of the Reiwa Era as risk aversion prevailed following an announcement by U.S. President Donald Trump that tariffs would be raised on Chinese imports, brokers said. The Nikkei ended below the 22,000 line for the first time in nearly a month.

Trump said Washington would raise duties on $200 billion of Chinese goods to 25 percent from 10 percent on Friday, accusing Beijing of reneging on commitments it had agreed to in trade deal negotiations.

“It’s a negative surprise. If not for trade jitters, the Nikkei would have risen amid a festive mood on the first trading day of the new era,” said Yutaka Miura, senior technical analyst at Mizuho Securities Co.

“Investors were concerned that the tariff hike will hit the Chinese economy once again, after it had shown signs of bottoming out recently, and if that happens it will trigger a slowdown in global growth,” Miura added.

Although Tokyo stock declines were limited in morning trading, losses widened in the afternoon after Chinese shares turned negative on reports by some Chinese media that Beijing is prepared to temporarily suspend trade talks with Washington.

“The risk aversion is expected to continue throughout the week and shares will fluctuate depending on developments in the U.S.-China trade talks” later this week, said Masahiro Ichikawa, senior strategist at Sumitomo Mitsui DS Asset Management Co.

U.S. media reported the world’s two largest economies are still set to hold talks in Washington on Thursday and Friday aimed at ending their tit-for-tat tariff war.

On the first section, declining issues outnumbered advancers 1,457 to 623, while 60 ended unchanged.

Companies with heavy exposure to China drew selling, with industrial robot maker Fanuc dropping ¥670, or 3.2 percent, to ¥20,105 and Hitachi Construction sagging ¥180, or 6.1 percent, to ¥2,770.

Semiconductor issues dropped amid worries about global growth triggered by the renewed trade tensions, with Sumco falling ¥58, or 4.0 percent, to ¥1,402 and Screen Holdings diving ¥240, or 4.5 percent, to ¥5,100.

Trading volume on the main section rose to 1.56 billion shares from 1.32 billion shares on April 26.

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