Business / Financial Markets

Nikkei drops to five-week low as U.S.-China trade worries deepen

Kyodo

Tokyo stocks continued to fall Wednesday, with the Nikkei index sinking to a nearly five-week low, as investor sentiment was hurt by the escalating trade row between the United States and China, which has renewed concern about global growth.

The 225-issue Nikkei average tumbled 321.13 points, or 1.46 percent, from Tuesday to 21,602.59, its lowest close since April 2. The broader Topix index of all first section issues on the Tokyo Stock Exchange finished 27.51 points, or 1.72 percent, lower at 1,572.33.

Every industry category lost ground, led by precision instrument, air transportation, and glass and ceramic product issues.

The Nikkei index has lost about 650 points over two days after trading resumed following the unprecedented 10-day holiday through Monday to celebrate the new emperor’s ascension to the throne.

Tracking overnight declines on Wall Street, Tokyo shares were weak throughout the day on continued U.S.-China trade concerns.

China said Tuesday that Vice Premier Liu He, the country’s chief trade negotiator, will visit the United States later this week for trade talks even as the United States looks set to raise tariffs on $200 billion worth of Chinese imports Friday.

Beijing is reportedly planning to impose retaliatory tariffs on U.S. goods, a move that could further roil world markets and affect global growth.

“In the worst case, the negotiations could break down. Investors may have to begin pricing in the possibility that the trade conflict will last for a long time,” said Makoto Sengoku, market analyst at the Tokai Tokyo Research Institute.

The tit-for-tat tariff war between the world’s two largest economies has increased concerns over the health of the global economy.

Before the Golden Week holiday, “the market had widely expected progress in the U.S.-China trade negotiations, but the optimism faded,” said Maki Sawada, vice president of the investment research and investor services department at Nomura Securities Co.

“Concerns have grown as investors cannot measure how much impact the additional tariffs would have on the global economy down the road,” Sawada added.

Stocks were also affected by the dollar’s fall to around a six-week low below the ¥110 line, with market players seeking the yen, which is perceived as a safe-haven asset.

On the first section, declining issues outnumbered gainers 1,804 to 287, while 49 ended unchanged.

Cyclical stocks that are vulnerable to macroeconomic changes were battered by investor concerns about global growth. Silicon wafer-maker Sumco Corp. plunged ¥72, or 5.1 percent, to ¥1,330, and industrial robot-maker Fanuc Corp. shed ¥450, or 2.2 percent, to ¥19,655.

Trade worries also dented Nikkei heavyweight Toyota Motor Corp., which fell ¥65, or 1.0 percent, to ¥6,759, although the automaker said in the afternoon it expects a 19.5 percent rise in group net profit for the current fiscal year ending March 2020 helped by cost-cutting efforts.

Japan Airlines Co. lost ¥137, or 3.6 percent, to ¥3,685 after a glitch that occurred early morning in the company’s automated check-in system caused the airline to cancel 32 domestic flights Wednesday. The system was restored by 10 a.m.

Trading volume on the main section fell to 1.50 billion shares from Tuesday’s 1.56 billion shares.

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