Tokyo stocks lost ground Wednesday, with players moving to unwind their positions ahead of the expected signing of a “phase one” trade deal between the United States and China.
The 225-issue Nikkei average on the first section of the Tokyo Stock Exchange dropped 108.59 points, or 0.45 percent, to end at 23,916.58 after rising 174.60 points Tuesday.
The Topix index of all TSE first section issues closed down 9.47 points, or 0.54 percent, at 1,731.06, following a 5.37-point climb the previous day.
Both indexes dropped for the first time in four trading days.
Market players took a wait-and-see stance throughout Wednesday’s trading before the signing of the potential trade deal by U.S. President Donald Trump and Chinese Vice Premier Liu He, the country’s top trade negotiator with the United States, at a White House meeting later in the day, brokers said.
The position-squaring increased due to a media report that the United States is planning to keep its existing punitive tariffs on Chinese goods in place until after the U.S. presidential election in November, they said.
The Tokyo market was also weighed down by profit-taking following its three-day rise, they added.
“Market players are awaiting the release of the details of the trade deal” especially because the media report and U.S. Treasury Secretary Steven Mnuchin said that the U.S. punitive tariffs will remain until the completion of a possible phase two Washington-Beijing trade deal, Chihiro Ota, general manager for investment research and investor services at SMBC Nikko Securities Inc., noted.
Meanwhile, Yutaka Miura, senior technical analyst at Mizuho Securities Co., said, “Investors are waiting to see the U.S. market’s reaction to the signing of the (phase one) trade deal.”
Miura added that drops in Chinese equities also dealt a blow to Tokyo stocks.
On the TSE’s first section, falling issues outnumbered rising ones 1,256 to 781, while 122 issues were unchanged. Volume dropped to 1.122 billion shares from Tuesday’s 1.234 billion shares.
Gunosy plunged 10.62 percent after the news curation app provider Tuesday reported an 89.7 percent year-on-year drop in its group operating profit for June-November 2019.
Game-maker Square Enix fell 4.40 percent, with investors disappointed by the company’s announcement that it will postpone the releases of two game titles.
Other losers included movie distributor Toho Co. and heavy machinery-maker IHI Corp.
On the other hand, electronics giant Panasonic Corp. and NH Foods attracted buying.
In index futures trading on the Osaka Exchange, the key March contract on the Nikkei average fell 90 points to 23,910.