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Tokyo: Nikkei tumbles to 5-week low on fears of deeper US-China trade tensions
[TOKYO] Japan's Nikkei tumbled to a five-week low on Wednesday morning as fears there might be a breakdown in US-China trade negotiations continued to pull down cyclical stocks.
Investors were spooked by a sell-off in Wall Street overnight where its Dow Jones Industrial Average had its second-biggest daily per centage drop of the year.
The Nikkei share average tumbled 1.7 per cent to 21,546.57, the lowest since April 3, before ending the morning session down 1.6 per cent at 21,584.26.
This followed a 1.5 per cent drop on Tuesday, when investors returned to the market after a 10-day break that included Japan's Golden Week holidays.
"The market before the Golden Week was optimistic. Investors had expected that the US-China trade talks would be resolved soon but things are looking serious," said Hiroyuki Ueno, a senior strategist at Sumitomo Mitsui Trust Asset Management.
"If it's just (US President Donald) Trump who is saying this, we can expect that his stance may turn around the next day. But since it now looks like his whole administration is echoing his stance, the situations look more complicated."
US Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin said late on Monday China had backtracked from commitments made during earlier negotiations.
The comments followed Mr Trump's statement on Sunday that he would raise tariffs on $200 billion worth of Chinese goods to 25 per cent from 10 per cent.
China-related stocks kept sliding. Construction equipment makers Komatsu plunged 3.9 per cent, and Hitachi Construction Machinery dropped 2.5 per cent.
Tech shares were sold, with TDK Corp falling 2.7 per cent and Hitachi sliding 2.9 per cent.
Yamaha Motor tumbled 11 per cent after its January-March operating profit dropped 12.8 per cent from a year earlier.
Japan Airlines stumbled 3.7 per cent after local media reported that a glitch in its automated check-in system delayed flights at domestic airports for about two hours in the early morning.
The media reports said the issue was resolved before 0100 GMT.
The broader Topix dropped 1.7 per cent to 1,573.28, with all 33 subsectors were in the red.
Declining issues outnumbered advancing ones 1,798 to 286.