TOKYO, Japan, Jan 24 – Tokyo stocks opened lower on Tuesday as the yen rose against the dollar on concerns over rising protectionism in the United States under President Donald Trump.
Trump followed up an inauguration speech seen as angry and protectionist by making his first official act the withdrawal from the 12-nation Trans-Pacific Partnership.
Trump also said he would renegotiate the North American Free Trade Agreement, threaten to impose border taxes, and his chief spokesman said the new president would not hesitate to confront Beijing over access to the South China Sea.
“If protectionism increases, companies that have been operating on the assumption of free trade until now will have to rethink their policies,” said Toshihiko Matsuno, a senior strategist at SMBC Friend Securities.
“The market is afraid that if President Trump further intensifies his protectionist colours with border taxes, the global economy will start shrinking,” he told Bloomberg News.
The benchmark Nikkei 225 index lost 0.24 percent, or 44.88 points, to sit at 18,846.15 in early trading, while the Topix index of all first-section issues fell 0.29 percent, or 4.46 points, to 1,510.17.
In November investors greeted Trump’s surprise election win in the hopes he would pursue pro-growth measures such as public works spending, lower taxes and regulatory reforms.
Trump confirmed on Monday he plans to pursue those priorities, but markets have been worried the tough talk will lead to a trade war.
In forex markets, the dollar weakened to 112.76 yen from 113.35 yen in Tokyo Monday afternoon.
A strong yen seen as a safe investment is a negative for Japanese exporters because it makes their products less competitive abroad and shrinks repatriated profits.
Automakers fell with Toyota dropping 0.86 percent to 6,631 yen and Honda down 1.36 percent to sit at 3,385 yen.
Takata was down 1.71 percent at 459 yen after six days of losses in which the stock had lost more than half its market value over fears of a lengthy bankruptcy restructuring for the airbag maker at the centre of the biggest-ever auto safety recall.