Nikkei slips as Trump trade fades, steelmakers lead losses
TOKYO : Japan’s Nikkei share average slipped on Monday as investors locked in gains, bracing for more detail on the Trump Administration’s trade policies, with steelmakers and shippers leading the losses.The Nikkei average dropped 0.9 percent to 19,110.82, edging close to a two-week low hit last week, wiping out all of its gains so far this year. Its rally since Trump was elected lost momentum after it hit a double top around 19,600 in late December and early January, as the yen has rebounded from lows.
“Some people are taking profits as they look at his protectionist, dark side of his policies,” said Norihiro Fujito, senior investment strategist at Mitsubishi UFJ Morgan Stanley Securities. “But on the other hand, he hasn’t even started his job formally yet. And there are not many examples where the share prices peak out before the inauguration of a U.S. President,” he added.
German carmaker BMW became the latest target of Trump’s attack on carmakers that export cars to the U.S. market from Mexico, as Trump warned the United States will impose a border tax of 35 percent.
In Tokyo market, the sectors that had benefited from expectations that Trump’s plan on big infrastructure spending will boost global demand, such as steelmakers and shippers, became the worst performer. Steelmakers dropped 2.5 percent, with industry leader Nippon Steel falling 3.9 percent. Shippers fell 2.0 percent. Defensive shares and domestic demand oriented-shares such as food companies and builders fared better, dropping only 0.5-0.6 percent.
The Topix index fell 0.9 percent to 1,531.64. Of the Tokyo Stock Exchange’s 33 industry subindexes, all but one declined, with airlines posting slim gains thanks to the yen’s strength in the last few sessions.
“The landscape has clearly changed from the first stage of Trump trades. The markets will be looking at what Trump will do, including tax reforms and so on,” said Nobuhiko Kuramochi, chief strategist at Mizuho Securities.
