Nikkei drops more than 1% on stronger yen, US president Donald Trump’s ‘America first’ policy

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Tokyo | Published: January 23, 2017 8:47:50 AM

Japan's Nikkei share average dropped more than 1 percent on Monday as shares of exporters fell on a stronger yen, while sentiment was subdued on concerns over newly sworn-in US President Donald Trump's protectionist trade view.

Analysts said Trump's plans to withdraw the United States from the Trans-Pacific Partnership (TPP) trade pact will have an adverse impact on Japan. (Reuters)Analysts said Trump’s plans to withdraw the United States from the Trans-Pacific Partnership (TPP) trade pact will have an adverse impact on Japan. (Reuters)

Japan’s Nikkei share average dropped more than 1 percent on Monday as shares of exporters fell on a stronger yen, while sentiment was subdued on concerns over newly sworn-in US President Donald Trump’s protectionist trade view. The Nikkei dropped 1.3 percent to 18,886.00 in midmorning trade.

Exporters dropped, with Toyota Motor Corp falling 1.3 percent, Honda Motor Co shedding 1.9 percent and Hitachi Ltd declining 1.2 percent after the dollar slumped 0.9 percent to 113.54, edging towards the seven-week low of 112.57 yen hit last week.

Trump, in his first address as the president on Friday highlighted “America first” policies that were short on specific proposals, disappointing investors hoping for details on his plans to stoke growth, spend on infrastructure and reduce taxes.

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“Since Trump repeats ‘America first’ so many times, investors in Japan are being defensive,” said Hiroyuki Nakai, chief strategist at Tokai Tokyo Research Center.

In a Reuters poll conducted last month, thirty of 33 analysts said Trump’s plans to withdraw the United States from the Trans-Pacific Partnership (TPP) trade pact will have an adverse impact on Japan.

While cyclical stocks and major shares take a hit as investors become risk averse, small-to-mid caps and start-up companies attract investors, analysts said.

“Not all sectors are negative. Stocks that are less affected by global events are attracting buyers,” said Hikaru Sato, a senior technical analyst at Daiwa Securities.

The Mothers index was up 0.1 percent, while the Jasdaq market added 0.3 percent. Risk consulting services provider Eltes Co jumped 8.7 percent while manufacturing support service provider JMC Corp gained 3.9 percent.

Toshiba Corp soared 6.6 percent after sources said that the company has begun preparations to sell a minority stake in its core chip business.

Meanwhile, Takata Corp, which dove to the limit down in the past two trading sessions on worries about the possibility of a court-led turnaround for its Japan business, remained, was untraded with a glut of sell orders.

The broader Topix dropped 1.2 percent to 1,515.33, and the JPX-Nikkei Index 400 slipped 1.3 percent to 13,572.78.

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