Stocks dive on Trump’s Jerusalem endorsement

December 6, 2017

Tokyo- Stocks plummeted on the Tokyo Stock Exchange Wednesday on worries about the Middle East situation following the news that US President Donald Trump will recognize Jerusalem as Israel's capital.

The 225-issue Nikkei average tumbled 445.34 points, or 1.97 percent, to close at 22,177.04, posting the biggest single-day point loss since Nov. 9, 2016, when then Republican candidate Trump won the U.S. presidential race. On Tuesday, the key market gauge fell 84.78 points.

The TOPIX index of all first-section issues finished down 25.55 points, or 1.43 percent, at 1,765.42, after rising 4.10 points the previous day.

The market opened lower after all three major US stock gauges--the Dow Jones industrial average, the S&P 500 index and the tech-heavy Nasdaq composite index--lost ground on Tuesday.

Stocks accelerated their downswing in the afternoon in line with the yen's strengthening against the dollar traced to media reports that Trump is considering moving the US embassy in Tel Aviv to Jerusalem.

The Nikkei average briefly lost over 500 points.

Trump's planned move "could cause a chaos," Hiroaki Hiwada, strategist at Toyo Securities Co. warned, adding that media reports on the topic put a damper on investor sentiment across Asia.

Selling intensified after "the Nikkei average fell below its 25-day moving average," Kenichi Hirano, market analyst at K Asset Co., said.

Hiwada indicated that the market showed some resilience backed by hopes that the Bank of Japan may buy exchange-traded fund purchases as it did on Tuesday.

Hirano predicted the market will soon find support from buying on dips.

Falling issues overwhelmed rising ones 1,677 to 319 in the TSE's first section, while 45 issues were unchanged.

Volume expanded to 1,791 million shares from Tuesday's 1,477 million shares.

Casual clothing store operator Fast Retailing lost 4.86 pct, hit by profit-taking after its recent surge, brokers said.

Export-oriented names, including automakers Toyota, Nissan and Honda as well as technology firms Hitachi and Canon, met with selling on the yen's appreciation.

Megabank groups Mitsubishi UFJ, Sumitomo Mitsui and Mizuho as well as insurers Dai-ichi Life and Tokio Marine were downbeat, following overnight falls in their US peers.

By contrast, ABC-Mart attracted purchases after the footwear shop operator reported Tuesday its same-store sales in November grew 8.4 percent from a year before.

In index futures trading on the Osaka Exchange, the key December contract on the Nikkei average plunged 410 points to 22,200. Jiji Press