Nikkei slips after weak U.S. data, financial stocks underperform

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Japanese stocks slipped on Wednesday morning after the dollar eased against the yen on weak U.S. economic data, while financials stocks underperformed hit by lower US yields. The Nikkei shares average dropped  0.5 percent to 19,814.88 as of 2:15 AM EDT. The dollar slipped as well 0.5 percent to one-week lows against its perceived safe-haven Japanese counterpart and currently standing at 112.49 yen. Meanwhile, U.S. housing starts plummeted 2.6 percent to a seasonally adjusted annual rate of 1.17 million units, the lowest since November.

The market’s mood was further lessened by flagging confidence over the US president Donald Trump’s ability to push through tax reforms and stimulus programs that investors had been hopeful for since his election in November.

Recently, Trump asked his now-dismissed FBI Director James Comey to finish off the agency’s investigation into ties between former White House national security adviser Michael Flynn and Russia, according to a source who had seen a memo written by Comey.

“We still can’t say clearly that this Trump’s case is a serious risk to the stock market yet. But people are watching if it leads to more serious problems such as a difficulty for him to push through his tax reforms and fiscal policy,” said Takuya Takahashi, a strategist in Japan.

Overnight, financial stocks such as insurers and banks – that earn profits from investing in higher-yielding products stumbled after U.S. Treasury yields dropped down as low as 2.31 percent.

Moreover, Dai-ichi Life Holdings fell 4.0 percent, Sompo Holdings dropped 1.8 per cent, while Mizuho Financial Group flagged 2.4 per cent.

Domestic-demand-sensitive stocks, such as utility and food shares, gained as investors stayed defensive. Tokyo Gas moved up 2.3 percent, and Ajinomoto and Japan Tobacco both went up 1.3 per cent.

The broader Topix shed 0.5 percent to 1,575.82 and the JPX-Nikkei Index 400 declined 0.6 percent to 14,063.86.

While in commodities trading, Crude oil for June delivery was down 0.64% or 0.31 to $48.35 a barrel. Brent oil for delivery in July dipped as well 0.39% or 0.20 to hit $51.45 a barrel, while the June Gold Futures contract kept on increasing 0.50% or 6.20 to exchange at $1242.60 a troy ounce.

USD/JPY was down 0.56% to 112.49, while EUR/JPY rose 0.48% to 124.77.

The US Dollar Index Futures was down 0.13% at 98.06.

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