Japan’s Topix recovers to close higher despite auto sector selloff
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Japan's benchmark Topix index managed to reverse early session losses on Thursday, closing modestly higher despite pronounced weakness in automotive stocks. The broader index edged up by nearly 0.1%, ending the day at 2,815.47, after recovering from an intraday decline of 0.95%. Investor sentiment improved significantly late in the session, primarily driven by robust demand for Topix futures.
The market initially reacted negatively following U.S. President Donald Trump’s announcement of a 25% tariff on imported automobiles and light trucks, effective next week. The policy move heightened concerns about increased costs and potential disruptions across global automotive supply chains. Consequently, shares of major Japanese automakers came under selling pressure, with Toyota Motor declining 2.04%, Honda Motor dropping 2.48%, and Nissan Motor slipping 1.68%.
However, the Topix’s subsequent recovery was underpinned by specific market technicalities. According to Seiichi Suzuki, chief equity analyst at Tokai Tokyo Research Institute, strong investor interest in Topix futures was evident ahead of dividend-related adjustments. With Thursday being the final trading day to secure dividends for companies ending their fiscal year in March, investors—particularly passive funds—moved proactively into index futures to maintain alignment and avoid tracking errors caused by upcoming dividend distributions.
Meanwhile, the Nikkei 225 index ended 0.6% lower at 37,799.97, dragged down notably by semiconductor-related stocks. Chip-testing equipment maker Advantest fell sharply, down 7.44%, exerting the most significant negative impact on the index. In contrast, Fast Retailing, owner of the Uniqlo brand, gained 0.65%, providing some offsetting support.
Overall, market response to Trump's tariff announcement remained contained, in line with investors’ expectations. Hiroyuki Ueno, chief strategist at Sumitomo Mitsui Trust Asset Management, noted investors' belief that despite aggressive rhetoric, Trump would avoid measures significantly harmful to economic stability.
For traders, the near-term outlook remains cautious yet balanced, with tariff developments continuing to weigh on specific sectors. Investors should monitor further trade-policy announcements closely while factoring in underlying demand for equities, especially ahead of key dividend and fiscal year-end adjustments.
The market initially reacted negatively following U.S. President Donald Trump’s announcement of a 25% tariff on imported automobiles and light trucks, effective next week. The policy move heightened concerns about increased costs and potential disruptions across global automotive supply chains. Consequently, shares of major Japanese automakers came under selling pressure, with Toyota Motor declining 2.04%, Honda Motor dropping 2.48%, and Nissan Motor slipping 1.68%.
However, the Topix’s subsequent recovery was underpinned by specific market technicalities. According to Seiichi Suzuki, chief equity analyst at Tokai Tokyo Research Institute, strong investor interest in Topix futures was evident ahead of dividend-related adjustments. With Thursday being the final trading day to secure dividends for companies ending their fiscal year in March, investors—particularly passive funds—moved proactively into index futures to maintain alignment and avoid tracking errors caused by upcoming dividend distributions.
Meanwhile, the Nikkei 225 index ended 0.6% lower at 37,799.97, dragged down notably by semiconductor-related stocks. Chip-testing equipment maker Advantest fell sharply, down 7.44%, exerting the most significant negative impact on the index. In contrast, Fast Retailing, owner of the Uniqlo brand, gained 0.65%, providing some offsetting support.
Overall, market response to Trump's tariff announcement remained contained, in line with investors’ expectations. Hiroyuki Ueno, chief strategist at Sumitomo Mitsui Trust Asset Management, noted investors' belief that despite aggressive rhetoric, Trump would avoid measures significantly harmful to economic stability.
For traders, the near-term outlook remains cautious yet balanced, with tariff developments continuing to weigh on specific sectors. Investors should monitor further trade-policy announcements closely while factoring in underlying demand for equities, especially ahead of key dividend and fiscal year-end adjustments.