Tokyo stocks sank more than one percent Thursday, joining broad selloffs in Asia on growing concerns about a trade war after Washington said it was considering raising the rate of threatened tariffs on Chinese goods.
The benchmark Nikkei 225 index lost 1.03 percent, or 234.17 points, to end at 22,512.53, while the broader Topix index gave up 1.00 percent, or 17.67 points, at 1,752.09.
Traders were spooked after US Trade Representative Robert Lighthizer said he was considering hiking proposed tariffs to 25 percent from a planned 10 percent on $200 billion of Chinese imports.
The development fuelled fresh fears about a full-blown trade war between the world’s top two economies.
“Concerns over US-China trade relations were reignited as the Tokyo market opened led by sell orders,” said Okasan Online Securities in a commentary.
“Some buying was seen among firms that had healthy earnings. But once Chinese shares opened lower, the Nikkei also began to fall,” it said.
Investors are left guessing about how the crisis will play out, with some worrying that with both sides digging in there could be more pain down the line, but others saying Trump is playing tough as a negotiating tactic.
“Investors are worried as they don’t know whether the (US-China) trade war is escalating or the countries are actually looking for a compromise plan,” said Masayuki Kubota, chief strategist at Rakuten Securities.
“While concerns about the global economy linger, however, there are some buybacks for companies whose earnings are good but are priced low,” providing support for the market, he added in a commentary.
In Tokyo trade, selling hit companies with close business ties with China.
Machinery maker Komatsu fell 3.66 percent to 3,239 yen and factory robot-maker Fanuc gave up 3.17 percent to 21,665 yen.
Sony, which upgraded its annual earnings forecast this week, enjoyed healthy gains most of the trading day before coming under selling pressure to end the day up 0.2 percent at 6,117 yen.
The dollar was trading at 111.63 yen against 111.62 yen in New York Wednesday.