Nikkei 225 Plunges on Trump's Protectionist Trade Policy Concerns
The Nikkei 225 index experienced a significant drop on November 26th, 2016, plummeting by over 700 points at one point. This decline was primarily driven by growing concerns surrounding U.S. President-elect Donald Trump's protectionist trade policies.
The benchmark index ultimately closed the day at 38,442.00, representing a decrease of 338.14 points or 0.87% compared to the previous day's closing. This market sell-off was directly triggered by Trump's social media posts earlier that day, where he threatened to impose new tariffs on China (10%), Canada (25%), and Mexico (25%) following his inauguration in January 2017.
The opening of the Tokyo Stock Exchange saw a sharp decline, with selling pressure evident across various sectors. Semiconductor-related stocks, including Advantest Corp. and Tokyo Electron Ltd., which hold significant weight within the Nikkei index, were particularly hard hit.
Despite the initial shock, Masahiro Ichikawa, chief market strategist at Sumitomo Mitsui DS Asset Management Co., suggested that the market's reaction to Trump's posts remained relatively calm. This relative calmness was attributed to investors becoming accustomed to Trump's negotiating tactics. Ichikawa further added that any future volatility stemming from Trump's policies would likely remain within a predictable range, as investors have already witnessed similar episodes in the past.