Nikkei slides as US tariffs and stronger yen weigh on markets
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Japan’s Nikkei 225 declined on Tuesday, pressured by escalating trade tensions and a strengthening yen, both of which unsettled investor sentiment. The index fell as much as 2.6% to its lowest level since September 18 before paring losses to close down 1.2% at 37,331.18. The broader Topix index also retreated, finishing 0.7% lower at 2,710.18.
Market jitters were fueled by the implementation of new U.S. tariffs, with President Donald Trump’s 25% levies on Canadian and Mexican imports taking effect, alongside a doubling of duties on Chinese goods to 20%. The measures have intensified trade conflicts with the top three U.S. trading partners, raising concerns over potential economic repercussions.
A stronger yen added further pressure, particularly on export-driven sectors. The Japanese currency appreciated to near its highest level since early December against the U.S. dollar, weighing heavily on automakers. Hino Motors saw the steepest decline, shedding 3.3%. The impact of currency fluctuations was compounded by Trump’s remarks that Japan and China should not continue devaluing their currencies, which he deemed unfair to the U.S.
Technology stocks also faced selling pressure, with chip-testing equipment maker Advantest dropping 4.3% after Nvidia, one of its key customers, tumbled overnight. AI-focused investor SoftBank Group fell 4.8%, reflecting broader weakness in the tech sector. Among other major decliners, Fast Retailing, parent company of Uniqlo, dipped 1.2%, while Seven & i Holdings saw a sharper decline of 6.9%.
However, defense-related stocks bucked the trend, with Mitsubishi Heavy Industries rallying 7.8% amid expectations of increased military spending in response to global geopolitical uncertainties.
The Nikkei volatility index spiked to 31.6 points, its highest level since early November following the U.S. presidential election, before settling at 27.2. Market participants remain focused on trade developments, currency movements, and broader economic signals, as uncertainty continues to drive volatility in Japanese equities.
Market jitters were fueled by the implementation of new U.S. tariffs, with President Donald Trump’s 25% levies on Canadian and Mexican imports taking effect, alongside a doubling of duties on Chinese goods to 20%. The measures have intensified trade conflicts with the top three U.S. trading partners, raising concerns over potential economic repercussions.
A stronger yen added further pressure, particularly on export-driven sectors. The Japanese currency appreciated to near its highest level since early December against the U.S. dollar, weighing heavily on automakers. Hino Motors saw the steepest decline, shedding 3.3%. The impact of currency fluctuations was compounded by Trump’s remarks that Japan and China should not continue devaluing their currencies, which he deemed unfair to the U.S.
Technology stocks also faced selling pressure, with chip-testing equipment maker Advantest dropping 4.3% after Nvidia, one of its key customers, tumbled overnight. AI-focused investor SoftBank Group fell 4.8%, reflecting broader weakness in the tech sector. Among other major decliners, Fast Retailing, parent company of Uniqlo, dipped 1.2%, while Seven & i Holdings saw a sharper decline of 6.9%.
However, defense-related stocks bucked the trend, with Mitsubishi Heavy Industries rallying 7.8% amid expectations of increased military spending in response to global geopolitical uncertainties.
The Nikkei volatility index spiked to 31.6 points, its highest level since early November following the U.S. presidential election, before settling at 27.2. Market participants remain focused on trade developments, currency movements, and broader economic signals, as uncertainty continues to drive volatility in Japanese equities.