Japan Nikkei falls on trade deal concerns, stronger yen

The Japan share market finished session lower on Wednesday, 04 December 2019, on tracking losses on Wall Street overnight amid diminished hopes of a possible near-term respite from U.S.-China trade war after comments from President Donald Trump and Commerce Secretary Wilbur Ross. At closing bell, the 225-issue Nikkei Stock Average dropped 244.58 points, or 1.05%, to 23,135.23, while the broader Topix index of all First Section issues on the Tokyo Stock Exchange sank 3.46 points, or 0.2%, at 1,703.27.

Total 20 issues of the 33 industry category of Topix index declined into negative territory, with Securities & Commodities Futures, Nonferrous Metals, Mining, Pharmaceutical, and Marine Transportation issues being notable losers, while Electric Power & Gas, Real Estate, and Construction issues were notable gainers.

Risk sentiment dampened amid renewed concerns over the outlook for the global economy as hopes of a possible near-term respite from the market-bruising U.S.-China trade war diminished after comments from President Donald Trump and Commerce Secretary Wilbur Ross. Trump suggested a deal might have to wait until after the 2020 election, and separately, Ross confirmed that new tariffs on Chinese imports would take effect on Dec. 15 as scheduled, unless substantial progress was made.

Washington and Beijing have been haggling over a phase one trade deal over the past several weeks, an effort seen by many investors as an attempt at a sort-of truce until the globe's two largest economies can agree on a longer-term relationship. Both sides have introduced tariffs on billions of dollars' worth of imports as the disagreement escalated over the last year; additional U.S. tariffs are set to take effect on Dec. 15.

Those remarks, on the heels of France's threatened retaliation over potential new U.S. duties on French products, itself a retaliation against a proposed French "digital tax," suggested that America's hydra-headed tariff war against its major trading partners would continue to dominate markets for the foreseeable future.

The French tax imposes a 3% tax on revenues tech companies generate in France, including targeted advertising and digital marketplaces. In response, the White House on Monday said it could impose duties of up to 100% on $2.4 billion in imports of French champagne, cheese and other luxury goods.

The setback in the Chinese trade negotiations, coupled with tariffs on the French with regard to the digital tax and tariffs on Brazil and Argentina for steel, disappointing the markets.

Shares of exporters declined inline with yen appreciation against dollar. The yen has strengthened over 1% in the past 48 hours. Stronger yen dented appetite in the country's exporters as it reduces profit when they repatriated it home. electronic parts maker Murata Manufacturing fell 2.4%, industrial robot manufacturer Fanuc dropped 1.6% and Honda Motor shed 1.1%.

Astellas Pharma fell 2.6%, extending their decline after it announced the acquisition of U.S. drugmaker Audentes Therapeutics Inc for a 110% premium.

Fast Retailing dropped 4.9% after the operator of the Uniqlo casual clothing chain reported weak domestic sales in November.

CURRENCY NEWS: The Japanese yen, often viewed as a safe-haven currency in times of economic uncertainty, appreciated against greenback. The Japanese yen traded at 108.50 against the dollar after strengthening from lows around 109.2 yesterday.

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