Japan: Nikkei falls on trade issues, global slowdown fears

Headline indices of the Japan share market declined on Wednesday, 04 September 2019, as risk sentiments dampened on tracking soft lead from Wall Street overnight after US data pointed to weakness in the manufacturing sector. Meanwhile, risk sentiments were further deteriorated on continued concerns over trade issues and jitters related to Britain's planned exit from the European Union. However, market losses were limited after the latest survey from Jibun Bank revealed Japan services sector rose in August with a PMI score of 53.3, from 51.8 in July. Around late afternoon, the 225-issue Nikkei Stock Average fell 9.89 points, or 0.05%, to 20,615.27, while the broader Topix index of all First Section issues on the Tokyo Stock Exchange shed 5.56 points, or 0.37%, at 1,505.23.

Total 26 sectors out of 33 of the sectors of Topix index declined, with Fishery, Agriculture & Forestry, Metal Products, Pulp & Paper, Chemicals, Iron & Steel, and Glass & Ceramics Products issues being notable losers, while Marine Transportation, Precision Instruments, and Pharmaceutical issues were notable gainers.

Wall Street stocks tumbled Tuesday as new tariffs in the US-China trade war took effect, while US data suggested weakness in the manufacturing sector. The Dow Jones Industrial Average closed 285.26 points lower at 26,118.02 while the S&P 500 declined 0.7% to end the day at 2,906.27. The Nasdaq Composite pulled back 1.1% to 7,874.16.

Washington and Beijing imposed new levies on September 1, with the US now levelling 15% tariffs on an assortment of consumer goods and China responding with its own duties. Meanwhile, against expectations for an unchanged outcome, the US ISM manufacturing index contracted in August.

Shares of automakers declined after reports that the sales of Japanese cars plunged 57% in South Korea as compared to a year earlier, amid a consumer boycott as Tokyo and Seoul remain locked in a diplomatic dispute. Toyota Motor, whose sales in South Korea tumbled 59% in August as compared to a year earlier, saw its stock slip 0.6%. Mazda Motor fell 1.3% and Mitsubishi Motor dropped 1.78%. Shares of Honda Motor, on the other hand, traded 0.2% higher despite seeing a 81% drop in local sales.

Fast Retailing gained after the clothing chain operator said same-store sales at its Uniqlo outlets in Japan rose 9.9% in August from a year earlier.

Kakaku.com and Nintendo shares traded higher on hopes of a potential inclusion of the Nikkei average in the periodic review of its constituents.

ECONOMIC NEWS: Japan Service PMI Accelerates In August-- Japan services sector rose in August with a PMI score of 53.3, the latest survey from Jibun Bank revealed on Wednesday, up from 51.8 in July and it moves further above the boom-or-bust line of 50 that separates expansion from contraction. Individually, there was a sharp rise in service sector output, although new business growth fell to a 13-month low. Business confidence remained subdued. The survey also showed that the composite index came in at 51.9, up slightly from 51.7 in the previous month.

CURRENCY NEWS: The Japanese yen appreciated against greenback on Wednesday, as demand for safe haven currency resumed on fears that the global economy may be slowing, after US data pointed to weakness in the manufacturing sector. The dollar fetched 105.86 yen in Asian trade, against 105.94 yen in New York.

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