Nikkei drops as Trump offers mixed signals on China trade deal

TOKYO: Japanese shares slipped on Wednesday after U.S. President Donald Trump left investors on tenterhooks as they await details on progress in negotiations with China to end a lingering trade war that has rattled the global economy.

The Nikkei share average fell 0.78% to 23,336.27, having cooled since it hit an 13-month high of 23,591 last Friday. The broader Topix lost 0.41% to 1,702.63. Trump dangled the prospect of completing an initial trade deal with China "soon", but at the same time warned he would raise tariffs on Chinese goods "very substantially" if China does not strike a deal..

"I guess it was his usual tactics but it wasn't positive," said Hideyuki Ishiguro, senior strategist at Daiwa Securities. "The market has been overheating so we need a period to cool down a bit too." Many market players have said a correction is inevitable after the Nikkei had risen sharply in recent months - more than 17% up from its seven-month low marked in early August.

Among blue chips, Nissan Motor slid 1.3% after the carmaker cut its full-year forecast to an 11-year low and posted a 70% slump in quarterly profit. Since the arrest of the firm's former chairman Carlos Ghosn almost a year ago, the company has lost about 30% of value. Elsewhere, GMO Payment Gateway dropped 5.1% after the e-commerce settlement service company's quarterly earnings and profit guidance for the year to next September fell short of market expectations.

Fujifilm, on the other hand, jumped 7.0% after the company reported strong quarterly earnings and estimated it would make a record annual profit. On the whole, investor sentiment remained fairly upbeat, with investors snapping up technology shares that are sensitive to the global economic outlook. Keyence rose 0.9% while Murata Manufacturing gained 0.8%.

Meanwhile the index of the Jasdaq start-up market ticked up 0.11% to hit an 11-month high. Real estate investment trusts (REITs) extended their recent losses, as residual hopes that a U.S.-China trade deal will ultimately be reached dented their allure as an alternative to low-yielding bonds.