Stocks suffered a sell-off Monday amid heightened fears about an escalation of the U.S.-China trade conflict, pushing the benchmark Nikkei average don to a two-month low below the 21,000 threshold.
The Nikkei 225 average dived 366.87 points, or 1.74 percent, to end at 20,720.29, the lowest closing level since June 4. On Friday, the key market gauge plunged 453.83 points.
The Topix, which covers all first-section issues on the Tokyo Stock Exchange, finished 27.58 points, or 1.80 percent, lower at 1,505.88 after losing 33.89 points Friday.
The market expanded losses in the morning on broad-based selling in the wake of falls in U.S. and European stocks on Friday.
Investors have grown more risk-averse since China showed on Friday its intention to hit back in response to U.S. President Donald Trump’s abrupt announcement the day before that Washington would slap additional tariffs on Chinese goods worth $300 billion on Sept. 1, brokers said.
Investor concerns about the trade war was fueled by the Chinese yuan’s plunge to an 11-year low against the dollar, because Beijing is believed to have allowed the Chinese currency’s drop in a possible retaliation against Trump’s move, brokers and other sources said.
The yen’s sharp strengthening against the dollar and falls in other Asian markets further chilled sentiment, brokers said.
The market, however, showed some resilience in the afternoon. There was speculation that the market was underpinned by the Bank of Japan’s purchases of exchange-traded funds.
Looking ahead, Yutaka Miura, senior technical analyst at Mizuho Securities Co., said the possibility cannot be ruled out that selling to test the market’s downside will grow toward special quotation fixings on Friday to settle August options contracts.
Falling issues far outnumbered rising ones 1,914 to 196 in the first section, while 39 issues were unchanged.
Volume decreased to 1.474 billion shares from 1.544 billion Friday.
China-linked issues plunged, with industrial robot producer Yaskawa Electric falling by 4.49 percent, peer Fanuc by 2.49 percent and construction machinery maker Hitachi Construction by 1.60 percent.
Financials, including mega-bank group Sumitomo Mitsui and insurer Dai-ichi Life, lost ground on a drop in long-term interest rates.
Yahoo Japan tumbled 12.50 percent after reporting weaker than expected earnings for April-June.
Among other losers were technology investor SoftBank Group and clothing store chain Fast Retailing.
Meanwhile, sporting goods maker Asics surged thanks to its announcements of strong January-June earnings and an own share buyback plan.
Also on the positive side were optical equipment maker Olympus and automaker Subaru.