Japan Stocks extend losses on virus, trade war woes

Japan share market finished session lower for second day in row on Thursday, 25 June 2020, on tracking negative lead from Wall Street overnight after the US signalled possible new tariffs on European goods and the International Monetary Fund slashed its global economic forecasts again on Wednesday. Meanwhile, lingering concern over the spread of coronavirus in the United States and a resurgence of cases in other major economies also weighed down sentiments.

At closing bell, the 225-issue Nikkei Stock Average fell 274.53 points, or 1.22%, to 22,259.79. The broader Topix index of all First Section issues on the Tokyo Stock Exchange shed 18.65 points, or 1.18%, at 1,561.85.

Investors risk sentiments dampened as a record daily increase in coronavirus infections in multiple states in the United States and a resurgence of cases in other major economies sparked concerns over the prospects for a global economic recovery from the pandemic.

Sentiment was soured further after reports that the administration of President Donald Trump is considering new tariffs on European goods. The U.S. Trade Representative said it was weighing new tariffs on US$3.1 billion (RM13.2 billion) in European goods amid a dispute over subsidies to planemaker Airbus, ratcheting up a fresh trade war tensions with the European Union. The Trump administration also has been threatening to reimposing tariffs on imports of aluminum from Canada on July 1 as the new USMCA, or the United States Mexico Canada Agreement, which replaced the North American Free Trade Agreement, is set to take effect.

Meanwhile, updated International Monetary Fund (IMF) economic forecasts also hit investor sentiment. The IMF cut its economic forecast for 2020, saying that the coronavirus pandemic has caused an unprecedented decline in global activity. The IMF dropped its global economic growth expectations for this year to negative 4.9%. That's almost two percentage points lower than three months ago. In 2021, global growth is expected to rebound to a 5.4% growth rate, still leaving the level of GDP about 6.5 percentage points lower than the pre-COVID-19 projections in January.

NEC jumped 2.4% after the electronics giant said it was talking with telecom group NTT on a capital and business tie-up for 5G wireless technology development.

Automakers and airlines were sharply lower, with Toyota Motor down 2.6% and Japan Airlines off 4.1%. Olympus jumped 11.2% after it announced plans to sell its struggling camera division to focus on medical equipment.

CURRENCY: The dollar was trading at 107.16 yen in Asian trade, compared with 107.05 yen in New York on Thursday .

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