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Tokyo: Stocks open lower on faded hopes for US-China deal
[TOKYO] Tokyo stocks opened 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 0.75 per cent or 176.04 points to 23,203.77 in early trade while the broader Topix index was down 0.59 per cent or 10.06 points at 1,696.67.
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.
"Equity markets have had a bit of a reality check as President Trump pours cold water over an imminent trade deal with China," said Rodrigo Catril, senior strategist at National Australia Bank.
Mr 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.
"While the trade mood music can change very quickly, events over the past 48 hours has forced a reassessment in terms of what to expect before the end of the year," Mr Catril said in a note on Wednesday.
The absence of a deal would raise the possibility of new US tariffs on China imports on Dec 15.
"So the tariff man is back and he has brought market volatility back to life, at least in the equity and bond market," the strategist said.
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 US dollar was trading at 108.61 yen early Wednesday, compared with 108.63 yen in New York on Tuesday and rates above 109 seen a week ago.
In Tokyo stocks trade, automakers lost ground, with Honda down 1.67 per cent at 3,053 yen and Nissan lower by 0.89 per cent at 672.1 yen.
Nintendo dropped 0.58 per cent to 44,130 yen after rises this week on robust software sales and hopes for the start of marketing its popular "Switch" console in China.