TOKYO: Japanese shares sank on Tuesday after a long weekend, clocking their sharpest one-day drop since April, as investors fretted over uncertainty surrounding the country’s next premier and persistent US-China trade tensions.
The Nikkei share average closed 2.58 percent lower at 46,847.32, while the broader Topix slid 2 percent to 3,133.99.
Japanese investors returning from a national holiday on Monday faced a complex global backdrop, including a stronger yen and a steep Wall Street sell-off on Friday.
While both saw partial reversals, market sentiment remained fragile as US-China trade tensions accelerated, with shifting signals from US President Donald Trump unsettling traders.
On balance, weaker US stocks and a stronger yen since the start of Japan’s extended weekend weighed on the market, said Maki Sawada, an equity strategist at Nomura Securities.
In addition, the initial euphoria from fiscal dove Sanae Takaichi’s election as leader of the Liberal Democratic Party at the start of the month has faded after coalition partner Komeito pulled support. This opened a small possibility of an opposition party leader being elected prime minister by parliament later this month. Local media say October 20 or October 21 are likely dates for the vote.
The Nikkei struck a record high last week in the immediate reaction to Takaichi’s surprise victory but the shock exit of Komeito has cast doubts over what happens next.
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