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Tokyo shares sag on fading hopes for US-China deal
TOKYO, Dec 4, 2019 (BSS/AFP) – Tokyo stocks ended lower on Wednesday,
dragged down by diminished hopes for an imminent US-China trade deal and a
stronger yen.
The benchmark Nikkei 225 index fell 1.05 percent, or 244.58 points, to
23,135.23 while the broader Topix index lost 0.20 percent, or 3.46 points, at
1,703.27.
Optimism that Beijing and Washington would eventually hammer out a partial
agreement as part of a wider deal had supported equities for weeks, helping
Wall Street to set numerous records.
But US President Donald Trump on Tuesday warned he had “no deadline” for
doing a trade deal with China and in some ways liked the idea of waiting
until after next year’s election.
“The market started under selling pressure following falls of the three
major US indices as President Trump hinted at delays in reaching an agreement
in the US-China trade negotiations,” Okasan Online Securities said in a note.
But investors stayed generally hopeful about the future of the local
bourse, with many waiting to see how the US market would react later before
further pushing down Tokyo shares, the brokerage said.
Bargain hunting also prevented sharper falls in Tokyo, said SMBC Nikko
Securities, but China-related shares suffered.
Trump’s comment added to trade uncertainty already stoked by Washington’s
re-imposition of metal tariffs on Argentina and Brazil and threats of steep
levies for French merchandise in retaliation for a French digital tax that
affects US tech giants.
Sparkling wine, yoghurt and Roquefort cheese could be affected as soon as
next month, while US Trade Representative Robert Lighthizer warned his office
was also considering similar moves against Austria, Italy and Turkey.
The absence of a deal would raise the possibility of new US tariffs on
China imports on December 15.
– ‘Tariff man is back’ –
“So tariff man is back and he has brought market volatility back to life,
at least in the equity and bond market,” Rodrigo Catril, senior strategist at
National Australia Bank, wrote in a note.
The bond market is “rightly taking the view that more tariffs are simply a
tax on the US economy and therefore negative for growth”, he said.
“The ‘shooting itself in the foot’ theory is evident when we look at
currency markets, with broad-based weakness for the US dollar.”
The Japanese parliament meanwhile approved the nation’s bilateral trade
agreement with the United States.
It will gradually lower tariffs on a range of products for both nations
particularly US farming exports, but levies on Japanese auto exports will
remain under further discussions.
The dollar bought 108.57 yen Wednesday, compared with 108.63 yen in New
York on Tuesday and rates above 109 seen a week ago.
In Tokyo stocks trade, China-related issues lost ground.
Construction equipment maker Komatsu fell 1.29 percent to 2,558.5 yen.
Cosmetics maker Shiseido plunged 3.49 percent to 7,654 yen.
Fast Retailing, operator of Uniqlo, fell 5.21 percent to 63,700 on news
that its existing store sales struggled in November.
Among automakers, Toyota added 0.84 percent to 7,783 yen. But Nissan fell
0.88 percent to 672.2 yen while Honda lost 0.45 percent to 3,091 yen.
Nintendo dropped 1.26 percent to 43,830 yen after rises this week on robust
software sales and hopes for the start of marketing its popular “Switch”
console in China.
The sharp drop of Nintendo came mainly after the company and its Chinese
partner Tencent officially made the announcement in early afternoon.
BSS/AFP/HR/1325