Nikkei slides on jitters over U.S.-China trade, Sony soars

  • Reuters
  • Stock Market News
Nikkei slides on jitters over U.S.-China trade, Sony soars
Credit: © Reuters.

* Nikkei ends at lowest point since mid-April

* Apple (NASDAQ: AAPL ) suppliers tank on earnings and China demand concerns

* Sony soars after it forecasts better-than-expected profit

By Ayai Tomisawa

TOKYO, May 7 (Reuters) - Japan's Nikkei slid on Tuesday as investors returned from a 10-day holiday to worries that U.S.-China trade negotiations may be at risk of breaking down.

Japanese markets were closed April 27 to May 6 for the Golden Week holidays.

Late on Sunday, U.S. President Donald Trump stunned financial markets by announcing he would hike tariffs on Chinese goods on Friday, triggering a global sell-off in stocks and other riskier assets which had been largely pricing in a trade deal. Nikkei share average .N225 dropped 1.5 percent to 21,923.72, its lowest close since April 12.

"Anything could have happened during the long holiday but the market had not priced in a potential breakdown of the U.S.-China trade talks," said Makoto Kikuchi, chief executive of Myojo Asset Management. "That's a totally unexpected scenario."

After the market close, China's commerce ministry said Vice Premier Liu He will visit the United States on May 9 and May 10 for bilateral trade talks at the invitation of senior U.S. officials. with high exposure to China such as construction equipment makers and factory automation machinery firms underperformed. Komatsu Ltd 6301.T tumbled 10 percent, Yaskawa Electric 6506.T dropped 6.4 percent and Fanuc Corp 6954.T shed 3.2 percent.

Apple suppliers also tanked as a double-whammy of concerns about earnings and fears about a fall in Chinese demand weighed.

Taiyo Yuden 6976.T nosedived 14.5 percent, while Foster Electric 6794.T tumbled 12.2 percent after it expected an 11.1 percent drop in its operating profit for the fiscal year ending March 2020. Manufacturing 6981.T plunged 13.2 percent after it expected a 17.5 percent drop in its operating profit for this fiscal year and Alps Alpine 6770.T dived 10.7 percent after it forecast a 22.1 percent fall in its operating profit for the first half of this fiscal year.

Sony Corp 6758.T soared 3.8 percent after the company expected to post an operating profit of 810 billion yen ($7.32 billion) for this fiscal year through March. It would be a 9.4 percent fall on the year but above the market consensus of 700-750 billion yen, according to SMBC Nikko Securities.

The broader Topix .TOPX dropped 1.1 percent to 1,599.84.

($1 = 110.6900 yen) (Editing by Jacqueline Wong)

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