Japan’s Nikkei share average fell on Tuesday as the safe-haven yen rose and as automakers tumbled on weaker-than-expected U.S. sales. Financial stocks such as banks and insurers, which seek to boost returns from higher yielding U.S. bonds, also lost ground after yields on 10-year U.S. Treasury notes overnight fell to the lowest level since Feb. 27.
The Nikkei dropped 0.3 percent to 18,929.72 points by midmorning. “Stock investors are becoming nervous about U.S. yields,” said Isao Kubo, equity strategist at Nissay Asset Management, adding that markets are focused on upcoming U.S. economic data and developments on U.S. President Donald Trump’s economic stimulus measures.
Mitsubishi UFJ Financial Group shed 1.7 percent, Mizuho Financial Group declined 0.9 percent, while Dai-ichi Life Holdings fell 2.1 percent and T&D Holdings tumbled 1.5 percent. U.S. auto sales for March came in below market expectations and gave early evidence that America’s long, robust boom cycle for car sales may finally be losing steam.
Shares in Toyota Motor Corp dropped 1.1 percent after it reported a 2.1 percent decrease in March sales compared to the previous year. Honda Motor Co tumbled 2.6 percent after its march sales dropped 0.7 percent. Some automakers such as Nissan Motor Co and Mazda Motor Corp reported increased sales, but their shares stumbled 2.6 percent and 3.8 percent, respectively, as uncertainty about future auto demand in the U.S. market weighed.
The dollar extended overnight losses and was down 0.15 percent at 110.685 yen, its lowest in a week as investors are cautious before the upcoming meeting between Trump and Chinese President Xi Jinping, while sentiment was soured by suspected suicide bombing in St. Petersburg, Russia.
Department store stocks also underperformed, with Isetan Mitsukoshi Holdings falling 1.2 percent and J.Front Retailing shedding 2.6 percent after they said March sales dropped 0.3 percent on the year, hit by weak demand for spring clothes due to unseasonally cold weather.
The broader Topix dropped 0.4 percent to 1,510.82 and the JPX-Nikkei Index 400 declined 0.4 percent to 13,513.43.