Stocks plummeted on the Tokyo Stock Exchange on Friday amid fear of a trade war escalation between the United States and China following U.S. President Donald Trump’s announcement of new tariffs on Chinese goods.
The 225-issue Nikkei average lost 453.83 points, or 2.11 percent, to end at 21,087.16, after rising 19.46 points on Thursday.
The Topix index of all first-section issues closed down 33.89 points, or 2.16 percent, at 1,533.46. It gained 2.21 points the previous day.
The market opened sharply lower in the wake of an overnight tumble on Wall Street and expanded losses on the yen’s surge against the dollar in the morning, forcing the key Nikkei average to give up more than 500 points to sink below the 21,000 threshold.
Investors turned risk-averse after Trump threw cold water over expectations for a deal to settle the U.S.-China trade conflict by announcing on Twitter Thursday his decision to slap a 10 percent tariff on additional Chinese goods worth $300 billion on Sept. 1, brokers said.
Heavy selling subsided after the early morning sell-off. But both the Nikkei and Topix indexes remained deep in negative territory for the rest of the Friday session.
Brokers said the dollar’s drops down to levels below ¥107 led to waves of selling of export-oriented issues. They also said stock falls in other major Asian markets, such as Shanghai, and weaker U.S. Dow Jones industrial average futures in off-hours trading contributed to Tokyo’s plunge.
Tomoaki Fujii, head of the investment research division at Akatsuki Securities Inc., said the Tokyo and New York markets “seemed to have overreacted” to Trump’s tweets, pointing out that he already had threatened to impose additional tariffs on almost all Chinese products.
Players took to the sidelines in the afternoon amid a dearth of other major incentives to see whether U.S. equities will stage a rebound or sink further in trading Friday, he noted.
Meanwhile, Hirofumi Yamamoto, strategist at Toyo Securities Co., said that “the Bank of Japan’s apparent purchases of exchange-traded funds” prevented the market from extending losses in the afternoon.
Losers trounced winners 1,994 to 129 in the TSE’s first section, while 26 issues were unchanged.
Volume jumped to 1.54 billion shares from Thursday’s 1.35 billion.
Bleak earnings reports also dampened some issues, including electronics maker Sharp, which slumped 13.69 percent, and Nippon Steel, which suffered a 9.29 percent fall.
Oil names dropped on the back of lower New York crude oil futures, with Cosmo Energy down 5.41 percent and Inpex 3.57 percent.
Among other major losers were trading house Mitsubishi and electric cable and fiber optics producer Fujikura.
On the other hand, Casio shot up 7.99 percent as the watch maker beat a market profit consensus.
Also on the positive side were game maker Capcom and electronic parts supplier Ibiden.
In index futures trading on the Osaka Exchange, the key September contract on the Nikkei average fell 490 points to end at 21,010.