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Japanese shares skid as trade war worries spur shift away from cyclicals

Published 04/12/2019, 08:23
Updated 04/12/2019, 08:27
© Reuters.  Japanese shares skid as trade war worries spur shift away from cyclicals

* Trump comments seen as sign Sino-U.S. trade deal elusive

* U.S. bill on Uighurs further complicating negotiation

* Cyclicals including chip-related shares hit

* Small, domestic-oriented shares outperform

By Hideyuki Sano

TOKYO, Dec 4 (Reuters) - Japanese shares tumbled on

Wednesday as comments from U.S. President Donald Trump and a

U.S. House bill targeting camps for Muslims in Xinjiang

reignited fears a trade deal between Washington and Beijing may

not come through.

Renewed concerns about the global economic outlook also

prompted investors to shift funds from global cyclicals to

domestic-demand oriented shares.

The Nikkei 225 index .N225 skidded 1.05% to 23,135.23,

closing below its 25-day moving average of 23,255, a key

technical support, for the first time in almost two months.

The broader Topix .TOPX lost 0.20% to 1,703.27 but ,

advancing shares outnumbered decliners by a ratio of 57 to 43 in

an unusual twist.

Trump's comments that a trade deal with China might have to

wait until late 2020 raised fresh doubts on when the dispute

might end, while a U.S. House bill targeting camps for Muslims

in Xinjiang drew Beijing's ire. The Uighur bill calls on the U.S. President to, among other

things, impose sanctions for the first time on a member of

China's powerful politburo.

"I think the Uighur bill is far more significant than Hong

Kong bill for China. The U.S-China trade talk is breaking down,"

said Hiroaki Hayashi, managing director at Fukoku Capital.

Cyclical shares led the losses, with securities brokerage

the worst performing among the Tokyo Stock Exchange's 33

industry subindexes .TSEK .

Nomura Holdings 8604.T fell 2.4% while Daiwa Securities

Group 8601.T dropped 1.8%.

Semiconductor-related shares that had benefited from hopes

of a bottom-out in the sector, were also caught in the

downdraft.

TDK 6762.T fell 1.8% while Taiyo Yuden 6976.T lost 2.1%.

Murata Manufacturing 6981.T stumbled 2.1% while industrial

robot manufacturer Fanuc 6954.T dropped 1.5%.

Generally, exporters were also hit from the yen's gains so

far this week. Honda Motor 7267.T shed 1.1%, though Toyota

Motor bucked the trend to rise 0.8% 7203.T .

The yen has strengthened over 1% in the past 48 hours.

Fast Retailing 9983.T dived 4.9% after the operator of the

Uniqlo casual clothing chain reported weak domestic sales in

November. The drop was enough to chop 110 points, or 0.5

percentage point, off the Nikkei.

On the other hand, many defensive shares advanced, including

utility companies.

Tokyo Electric Power 9501.T rose 3.2% while Chubu Electric

Power 9502.T gained 1.9% and Osaka Gas 9532.T 1.8%.

Small cap shares were another bright spot, with Topix Small

.TOPXS , which excludes top 500 companies, rising 0.40%.

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