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Tokyo stocks close lower on US-China tension

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TOKYO (AFP) - Tokyo stocks closed lower yesterday, snapping a four-day winning streak, with investor sentiment dampened by rising US-China tensions over Hong Kong.


The Nikkei 225 index slipped 0.18 percent, or 38.42 points, at 21,877.89. Over the week, the key index rose 7.31 percent.


The broader Topix index lost 0.87 percent, or 13.67 points, landing at 1,563.67, while gaining 5.81 percent over the week.


Stock prices had risen recently on hopes for economic restarts and the development of vaccines against the coronavirus.


But “US-China tensions, especially possible action by the US over Hong Kong, do have the potential to change this narrative significantly”, said Tapas Strickland, economics and markets director at National Australia Bank.


US President Donald Trump has scheduled a press conference on China for later Friday following Beijing’s approval of a plan for a security law in Hong Kong, prompting caution among investors.


“There is a lot of speculation of what this could entail, but could include removing specific protections regarding Hong Kong to allow sanctions against Chinese individuals/businesses operating in Hong Kong,” Strickland said in a commentary. The move came after Washington revoked the special status conferred on Hong Kong, paving the way for the territory to be stripped of trading and economic privileges.


US Secretary of State Mike Pompeo said the status had been withdrawn because China was no longer honouring its handover agreement with Britain to allow Hong Kong a high level of autonomy.


The dollar fetched 107.13 yen in Asian trade yesterday afternoon, against 107.59 yen in New York late Thursday.
In Tokyo, Nissan dived 10.78 percent to 400.9 yen and its smaller alliance partner Mitsubishi Motors tumbled 8.98 percent to 304 yen after Nissan reported a huge US$ 6.2-billion annual net loss as it reels from the impact of the virus.


“We are extremely concerned about the impact from the coronavirus pandemic,” ratings agency Moody’s said in a statement sent to AFP.


“The worsening of the global economic outlook could have great impact on demand in the auto industry,” it said.
Other carmakers were also lower, with Toyota trading down 3.12 percent at 6,755 yen and Honda off 3.93 percent at 2,784 yen.


Among other shares, Sony eased 0.14 percent to 6,874 yen while Uniqlo casual wear operator Fast Retailing rose 2.40 percent to 60,530 yen.


Japan’s jobless rate in April stood at 2.6 percent -- worse than the 2.5 percent in the previous month and the highest figure since December 2017, the internal affairs ministry said minutes before the opening bell.


And Japan’s industrial output plunged 9.1 percent month-on-month in April, the industry ministry said separately, noting in a commentary that the country’s factory output “is rapidly declining”.


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