Tokyo stocks may stay volatile this week if U.S.-China trade progress sours

Jiji PressTOKYO (Jiji Press) — Tokyo stocks may remain volatile this week depending on developments related to the U.S.-China trade conflict, with trading volume expected to thin out in the summer vacation season.

Last week, the 225-issue Nikkei average lost 402.34 points, or 1.91 percent, to end at 20,684.82 on the Tokyo Stock Exchange, amid concerns over the trade row between the world’s two largest economies growing after U.S. President Donald Trump’s announcement that Washington will slap a 10 percent tariff on additional Chinese goods worth $300 billion on Sept. 1.

In addition, China’s guiding of the yuan to the weakest level in 11 years against the dollar and Washington’s subsequent designation of Beijing as a currency manipulator raised fresh fears of a currency war between the economic superpowers.

This week, the Nikkei is expected to move mainly between 20,000 and 21,000, analysts and brokers said. The Tokyo market will be closed on Monday for a national holiday.

“U.S.-China disputes may intensify further,” said Yutaka Miura, senior technical analyst at Mizuho Securities Co., pointing to the planned implementation of an interim U.S. rule Tuesday banning federal procurement of communications equipment and security cameras from five Chinese firms, including Huawei Technologies Co.

“If China takes a hardline stance against the procurement ban and allows further weakening of the yuan against the dollar, the Tokyo market would drop in response to likely falls in U.S. stocks and the yen’s possible appreciation against the dollar,” Miura said, adding that the Nikkei average may breach 20,000 in that event.

Masayuki Otani, chief market analyst at Securities Japan Inc., said, “Market volatility would remain high amid an expected lack of participants in the vacation season.”

Chances cannot be ruled out that the Nikkei will touch the recent low of 20,110, Otani noted.Speech

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