Japan Market falls on Sino-U.S. trade tensions

Headline indices of the Japan share market were lower on Monday, 30 September 2019, following weak lead from Wall Street last week, and on mounted fears of an escalation in Sino-U.S. trade tensions after the news that the Trump administration is considering radical new financial pressure tactics on Beijing, including the possibility of delisting Chinese companies from US stock exchanges. Around late afternoon, the 225-issue Nikkei Stock Average dropped 189.31 points, or 0.87%, to 21,689.59, while the broader Topix index of all First Section issues on the Tokyo Stock Exchange shed 18.63 points, or 1.16%, at 1,585.62.

All 33 industry category of Topix index declined into negative territory, with Electric Power & Gas, Mining, Air Transportation, Oil & Coal Products, Pharmaceutical, Metal Products, and Rubber Products issues being notable losers.

Tokyo market commenced trading with a back-foot on mounted fears of an escalation in Sino-U.S. trade tensions after news that the U.S. administration is considering de-listing Chinese companies to limit U.S. investment in Chinese companies. Adding to the gloom, official China's factory activity shrank for the fifth straight month in September, pointing to persistent pressure on Southeast Asia's biggest trading partner from the protracted trade war.

The manufacturing purchasing managers index rose to 49.8 in September from 49.5 in August, according to the National Bureau of Statistics released on Monday. A subindex measuring total new orders received by manufacturers in China rebounded to 50.5 in September from 49.7 in August. China's official nonmanufacturing PMI, also released Monday, edged down to 53.7 from 53.8 in August. Meantime, private business survey showed China's factory activity unexpectedly expanded at the fastest pace in 19 months in September as plants ramped up production and new orders rose. The Caixin/Markit Manufacturing Purchasing Managers' Index (PMI) for September rose to 51.4 from 50.4 in August, marking the second straight month of expansion. The 50-mark separates expansion from contraction on a monthly basis.

Market participants were also awaiting key events and data later this week, including the Bank of Japan's Tankan quarterly business confidence survey tomorrow, and a sales tax hike also tomorrow.

CURRENCY NEWS: The Japanese yen, often viewed as a safe-haven currency in times of uncertainty, depreciated against greenback on Monday. The Japanese yen traded at 107.94 after weakening from levels below 107.2 in the previous trading week.

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