Tokyo stocks start week in the red

Pedestrians stand in front of a stock indicator showing share prices of the Tokyo Stock Exchange in Tokyo on October 15, 2018. – Tokyo’s benchmark Nikkei index dropped more than 1.8 percent on October 15, with pessimism over Japan-US trade negotiations and an expected tax hike weighing on the Japanese market. (Photo by Kazuhiro NOGI / AFP)

Tokyo stocks opened lower Monday, kicking off the week in the red following several days of extreme volatility on global markets, with higher oil prices and an expected tax hike weighing on the Japanese market.

The benchmark Nikkei 225 index was lower by 0.78 percent or 177.31 points at 22,517.35 in early trade, while the broader Topix index was down 0.63 percent or 10.68 points at 1,691.77.

“The market remains a bit unstable with factors such as higher oil” worrying investors, Kyoko Amemiya, senior market strategist at SBI Securities, told AFP.

The oil price has spiked due to concerns over worsening US-Saudi Arabia relations due to the alleged murder of journalist Jamal Khashoggi in the Saudi consulate in Istanbul.

Also encouraging market bears was an expected announcement by Prime Minister Shinzo Abe of a two percentage point hike in the sales tax, which most experts believe will act as a drag on the world’s third-biggest economy.

“We have never seen a share price rise in the past after an announcement of a sales tax hike,” noted Amemiya.

Some investors were also seen taking profits after a strong rebound on Friday, she added.

Looking ahead, investors are closely watching a series of global economic data due later this week, said Tsuyoshi Nomaguchi, a strategist at Daiwa Securities.

“The focus is how much impact US interest rate rises would have on housing-related data, and the extent of the US-China trade war’s impact on the Chinese economy,” he said.

For that reason China’s July-September GDP data due on Friday is worth watching, he said.

The dollar fetched 112.09 yen in early Asian trade, against 112.18 yen in New York.

On Wall Street, the Dow closed up 1.2 percent at 25,339.99.

In Tokyo, some oil-related shares were lower, with oil refiner Idemitsu Kosan down 0.66 percent at 5,960 yen and its rival JXTG down 0.72 percent at 792.4 yen.

Automakers were also among the losers, with Toyota down 1.31 percent at 6,521 yen and Honda down at 1.87 percent at 3,034 yen.

Banks also fell, with Mitsubishi UFJ Financial down 1.80 percent at 673.3 yen and Sumitomo Mitsui Financial down 1.83 percent at 5,355 yen.

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