Nikkei 225 closes lower by 0.79% at 21,385.16

Tokyo’s main index closes lower as Asian stocks fall in light of fading trade optimism and poor Chinese data

Nikkei 28-02
Japanese stocks performed poorly on the session as optimism from trade talks between US and China are put into question following comments by Lighthizer yesterday. Poor Chinese PMI data earlier in the day also isn’t helping with sentiment and as a result, markets are leaning towards a more softer risk tone as we gear towards European trading.
Of note, Chinese stocks are lower with the Shanghai Composite trading 0.5% down in the final hour of trading now. Some questionable rhetoric on the Trump-Kim summit is also something that could potentially meddle with risk sentiment later, so just be wary of that.

Japan Industrial production for January, preliminary:-3.7 % m/m (expected -2.5%)

Trade tensions weighing on output in Japan

-3.7% m/m for a big miss – terrible data for Japan output
  • expected -2.5% m/m, prior -0.1%
0.0% y/y
  • expected 1.3% y/y, prior -1.9%
Outlooks for Japanese manufacturers from the METI:
  • see Feb output +5.0% m/m
  • see March output at -1.6% m/m
January IP falling its hardest since the same month in 2018
  • this is the third consecutive monthly decline
As noted in the preview (link below), there can be distortions in Jan and Feb data due to the Lunar New Year celebrations in China.
To the extent this impacts BOJ thinking it further distances the prospect of any exit from easy monetary policy. Thus a yen negative.

Nikkei reports Chinese companies are starting to curb hiring in 2019

Japanese press reports on a small survey (30 firms present at job fairs in the neighbouring cities of Shanghai, Kunshan and Suzhou last week)

  • 10 plan to cut back or freeze hiring in 2019 from a year earlier
Bear in mind that is a very small sample, but the Nikkei does add:
  • Late February is normally the busiest season for job hunting and hiring in China


  • a job fair at a Kunshan career center last Thursday was nearly half empty
  • Only 80 companies, mostly manufacturers, participated as many gave up on hiring or left booths unattended with only their names displayed.
  • Suffering from trade tensions, suppliers of liquid-crystal displays and smartphone components in particular plan to cut back on hiring. 
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