Trade war fears, stronger yen topple Japanese shares to 2-month lows
Japanese shares tumbled on Monday, as investors grew nervous about a prolonged U.S.-China trade war, with a rapidly strengthening yen dragging down exporters like Panasonic and Daikin.
The Nikkei share average shed 1.7%, extending Friday’s sizable loss of 2.1%, to 20,720.29 for its lowest finish since June 5. Of Tokyo’s 33 subindexes, 32 industry groups were in the red.
The grim mood followed declines on Wall Street on Friday with the blue chip Dow and the S&P 500 hitting their lowest levels since late June.
U.S. President Donald Trump abruptly decided on Thursday to slap a 10% tariff on $300 billion of Chinese imports, stunning markets and ending a month-long trade truce. China has vowed to fight back on Friday.
The rapidly strengthened yen during Asian trading also soured sentiment and dragged down exporters, with Nissan dropping 4.3%, Panasonic down 3.7% and Daikin Industries slipping 3.1%.
On the currency market, the yen gained as much as 0.8% to 105.785 yen to the dollar, after the Chinese yuan weakened beyond the psychological 7-per-dollar threshold to a record low in offshore trading. All else being equal, a stronger yen hurts Japanese exporters’ profits.
“With the yuan’s depreciation sparking fears of a currency war, today we’re seeing a full-fledged risk-off mood across asset classes. The pace of the yen’s appreciation looks quite worrisome,” said Yasuo Sakuma, chief investment officer at Libra Investments.
