Japanese stocks slip as automakers hit by weak US sales

Published: October 03, 2018 12:19:56 | Updated: October 05, 2018 12:34:10

File Photo (Collected)

Japanese stocks fell on Wednesday morning as automakers were hit by a sharp drop in US new car sales last month while other stocks, including financials, retreated after a rally over recent weeks.

The Nikkei share average declined 0.5 per cent to 24,141.50 in midmorning trade, though it was still holding at 27-year highs.

The weak yen trend paused as the Japanese currency attracted safety bids amid concerns over Italy’s budget plan.

The auto sector was the worst performer on the board, falling 2.0 per cent followed by insurers and banks which shed 1.0 per cent and 0.9 per cent, respectively.

Major automakers on Tuesday posted a hefty drop in US new vehicle sales for September.

Sales in September 2017 were boosted by major replacement demand for water-damaged vehicles following Hurricane Harvey, which had flooded parts of southeastern Texas in August that year.

Toyota Motor Corp declined 2.2 per cent, Honda Motor Co tumbled 3.0 per cent and Nissan Motor Co shed 1.6 per cent.

Financial stocks lost ground, with Dai-ichi Life Holdings sliding 2.0 per cent and Sumitomo Mitsui Financial Group falling 1.4 per cent.

Suruga Bank was volatile after sources told Reuters that Japan’s financial regulator will order the bank to halt some operations in the wake of improper lending on property investments.

The stock jumped as much as 16 per cent after slipping into the red in early trade, with traders saying that retail investors were seen covering their short positions after pricing in the bad news.

The broader Topix fell 0.2 per cent to 1,819.64.

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