Tokyo’s Stock Investors Add France’s Le Pen to List of Risks

  • Le Pen pledges to take France out of the EU; yen jumps
  • French election one of the biggest risks of year: SMBC Friend

Donovan: Market Concerns Are About Le Pen's Position

Just as stock investors in Tokyo were starting to factor in the outlook for global trade under U.S. President Donald Trump, comments from France’s far-right leader have pushed down Japanese shares.

The Topix index declined, with exporters dragging on the benchmark, after European shares drifted slid Monday as prospective French presidential candidate Marine Le Pen unveiled a manifesto pledge to take the country out of the European Union should she win. The yen held gains after strengthening 0.8 percent on Monday amid increased risk-off sentiment. Trump and Japanese Prime Minister Shinzo Abe are scheduled to meet in Washington on Friday.

Marine Le Pen. Photographer: Marlene Awaad/Bloomberg

Marine Le Pen.

Photographer: Marlene Awaad/Bloomberg

“The French election is one of the biggest risks of this year, and if Le Pen wins within this climate of increasing anti-globalism, there’s the risk that the European Union will collapse,” said Toshihiko Matsuno, a senior strategist at SMBC Friend Securities Co. in Tokyo. “The yen is also strengthening due to concerns over the U.S.-Japan meeting this week, and it’s a tougher situation for Japanese stocks.”

Japan’s earnings season continues, with more than 100 companies on the Topix reporting results Tuesday including JX Holdings Inc. and NTT Data Corp. Toyota Motor Corp. said Monday that it expects profit to fall to 1.7 trillion yen ($15.2 billion) for the fiscal year ending next month, about a quarter less than the previous annual period. JX Holdings raised its full-year net income and operating profit forecasts on Tuesday.

Summary

  • Topix -0.3% to 1,516.15 at the close in Tokyo
  • Nikkei 225 -0.4% to 18,910.78
  • Yen -0.1% at 111.84 per dollar after strengthening 0.8% Monday
  • Toyota -2.3%, Mazda Motor -0.7%
  • Disco +13%; Raises full-year operating profit forecast 21% to 30.7b yen
  • Maruha Nichiro +5.8%; lifts full-year operating profit forecast 18% to 26b yen
  • Nippon Chemi-Con +10% after doubling full-year operating profit forecast to 3b yen
  • Nishimatsuya Chain -8.2% after Mitsubishi UFJ Morgan Stanley cuts rating to neutral from overweight
  • Sega Sammy -5.6%; unchanged guidance implies 4Q profit drop

Other Japan market news:
Toyota’s Trade Heat From Trump Toughens Test of U.S. Demand (1)
Marlboro Man Takes E-Cigs Share on Japan Tobacco Supply Woes (1)
BOJ’s Record Bond Purchases Bring Taper Need Back in Focus (1)
Sumitomo Corp Says It’s Not Source Chile Writedown Report (1)
Strategists’ 1H, Full-Year Forecasts for Japan’s Topix (Table)

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