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Japan's Nikkei share average dropped on Friday morning after Germany's Daimler cut its profit forecasts citing tariff concerns and some US data came in below expectations, hurting cyclical stocks.
The auto sector was under the most pressure, tumbling 2.2 per cent to be the worst performer on the board. The fall came after Germany's Daimler cut its 2018 profit forecast because of fears over tariffs on the Mercedes Benz cars it exports from the United States to China.
BMW said it was looking at “strategic options” because of the trade dispute between the United States and China.
Toyota Motor Corp dropped 2.8 per cent, Honda Motor Co and Mazda Motor Corp fell 2.3 per cent. The Nikkei fell 0.9 per cent to 22,480.90 in midmorning trade. The benchmark index has declined 1.6 per cent in the week.
The Philadelphia Federal Reserve said overnight that its business conditions index fell to 19.9 in June, the lowest level since November 2016, from 34.4 in May.
“The weak US economic data and trade war headlines are all hurting the Japanese market's sentiment and prompting a sell-off in blue chip stocks,” said Yoshinori Shigemi, global market strategist at JPMorgan Asset Management.
Tariff threat on Chinese goods
Earlier this week, US President Donald Trump had threatened to impose a 10 per cent tariff on $200 billion of Chinese goods while Beijing warned it would fight back.
India, the world's biggest buyer of US almonds, had raised the import duty on the commodity by 20 per cent, joining the European Union and China in retaliating against Trump's tariff hikes on steel and aluminium.
“People started to worry seriously that the global economy will falter,” Shigemi said.
Shippers also underperformed, with Mitsui OSK Lines and Kawasaki Kisen both sliding 2.5 per cent on concerns that shipping demand will decline due to falling commodity prices.
Conversely, consumer goods makers, which suffer less from such global woes, attracted buying. Cosmetics maker Shiseido Co rose 0.5 per cent, Japan Tobacco added 0.6 per cent and diaper maker Unicharm Corp advanced 0.9 per cent.
The broader Topix shed 0.6 per cent to 1,740.94.
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