October 3, 2019 / 6:57 AM / 16 days ago

Tokyo shares tumble on weak U.S. data, Trump tariff threat against Europe

TOKYO, Oct 3 (Reuters) - Japanese shares took a battering on Thursday, with the benchmark Nikkei falling 2%, after a private sector jobs report in the United States offered fresh evidence that the trade war with China is taking a toll on the economy.

Compounding investor anxiety, Washington opened a new front in its trade war with Europe, driving the Nikkei share average down 2.0% to 21,341.74, its lowest closing since September 9. The broader Topix lost 1.7% to 1,568.87, also more than a three-week low.

On Wednesday, data showed hiring by U.S. private employers had cooled in September, another worrying signal after a report on Tuesday showing U.S. September factory activity contracted by the most in more than a decade.

Global markets were also rattled after Washington said it will slap 25% tariffs on French wine, Italian cheese and single-malt Scotch whisky, in retaliation for European Union subsidies on large aircraft, threatening to trigger a tit-for-tat trans-Atlantic trade war.

“While direct impacts on Japanese shares should be limited, markets are looking at them in terms of whether the world is heading further to protectionism, which will be bad for the global economy,” said Masayuki Kubota, chief strategist at Rakuten Securities.

While all of Tokyo bourse’s 33 sector subindexes finished in negative territory, cyclical shares led Thursday’s losses, with mining falling 3.7% and transport equipment makers losing 2.5% as investors fret about a possible U.S. recession.

Among automakers, Toyota Motor Corp slid 2.5% while Suzuki Motor Corp dived 4.0% and Nissan Motor was down 2.6%.

Markets players say the selling was inevitable given many shares had been overbought.

So-called up-down ratio, which measures the number of shares that have risen over the past 25 days against those that have fallen, rose to 141% on Wednesday, way above 120% mark usually seen as a sign of short-term overheating.

Nikkei heavyweight Fast Retailing slumped 3.9% after the company said its same-store sales fell 4.2% in September from a year earlier.

Bucking the broader market, Nitori Holdings jumped 2.2% after the discount furniture store operator said sales rose 6.6% to 321.6 billion yen for the March-Aug period.

Elsewhere, interest rate-sensiive TSE REIT index gained 0.3% as falling Japanese government bond yields have increased the demand. (Additional reporting by Hideyuki Sano; Editing by Richard Borsuk & Shri Navaratnam)

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