December 4, 2019 / 7:25 AM / 4 days ago

Japanese shares skid as trade war worries spur shift away from cyclicals

* Trump comments seen as sign Sino-U.S. trade deal elusive

* U.S. bill on Uighurs further complicating negotiation

* Cyclicals including chip-related shares hit

* Small, domestic-oriented shares outperform

By Hideyuki Sano

TOKYO, Dec 4 (Reuters) - Japanese shares tumbled on Wednesday as comments from U.S. President Donald Trump and a U.S. House bill targeting camps for Muslims in Xinjiang reignited fears a trade deal between Washington and Beijing may not come through.

Renewed concerns about the global economic outlook also prompted investors to shift funds from global cyclicals to domestic-demand oriented shares.

The Nikkei 225 index skidded 1.05% to 23,135.23, closing below its 25-day moving average of 23,255, a key technical support, for the first time in almost two months.

The broader Topix lost 0.20% to 1,703.27 but , advancing shares outnumbered decliners by a ratio of 57 to 43 in an unusual twist.

Trump’s comments that a trade deal with China might have to wait until late 2020 raised fresh doubts on when the dispute might end, while a U.S. House bill targeting camps for Muslims in Xinjiang drew Beijing’s ire.

The Uighur bill calls on the U.S. President to, among other things, impose sanctions for the first time on a member of China’s powerful politburo.

“I think the Uighur bill is far more significant than Hong Kong bill for China. The U.S-China trade talk is breaking down,” said Hiroaki Hayashi, managing director at Fukoku Capital.

Cyclical shares led the losses, with securities brokerage the worst performing among the Tokyo Stock Exchange’s 33 industry subindexes.

Nomura Holdings fell 2.4% while Daiwa Securities Group dropped 1.8%.

Semiconductor-related shares that had benefited from hopes of a bottom-out in the sector, were also caught in the downdraft.

TDK fell 1.8% while Taiyo Yuden lost 2.1%.

Murata Manufacturing stumbled 2.1% while industrial robot manufacturer Fanuc dropped 1.5%.

Generally, exporters were also hit from the yen’s gains so far this week. Honda Motor shed 1.1%, though Toyota Motor bucked the trend to rise 0.8%.

The yen has strengthened over 1% in the past 48 hours.

Fast Retailing dived 4.9% after the operator of the Uniqlo casual clothing chain reported weak domestic sales in November. The drop was enough to chop 110 points, or 0.5 percentage point, off the Nikkei.

On the other hand, many defensive shares advanced, including utility companies.

Tokyo Electric Power rose 3.2% while Chubu Electric Power gained 1.9% and Osaka Gas 1.8%.

Small cap shares were another bright spot, with Topix Small , which excludes top 500 companies, rising 0.40%. (Reporting by Tokyo Markets Team; editing by Uttaresh.V & Shri Navaratnam)

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