Nikkei gains on tariff relief; but policy volatility limits conviction
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Japanese equities closed higher on Monday, with the Nikkei 225 rising 1.27% to end at 34,012.88, supported by a partial rollback in U.S. tariff plans. The White House’s decision to exclude smartphones and computers—a category representing 23% of U.S. imports from China—from immediate duties sparked buying interest in sectors closely tied to global tech supply chains. However, the broader investor sentiment remained cautious due to President Trump’s warning that new tariffs on semiconductors will be unveiled within the week and a final decision on mobile devices is still pending.
Despite the benchmark's strong headline gain, underlying tone in the market was less enthusiastic, with several large-cap names closing in negative territory. This divergence reflects broader uncertainty linked to fluctuating U.S. trade policy, which continues to create headwinds for forward-looking investment strategies. Analysts remain skeptical about the sustainability of any relief rally, given the absence of long-term policy clarity.
Domestic macroeconomic data provided a mixed backdrop. Japan’s industrial production rose 2.3% in February, supported by a 3% uptick in shipments, suggesting demand-side resilience. Inventories declined 1.7%, a positive signal for supply-chain normalization, although production capacity dropped by 0.4% and the operating ratio fell 1.1%, highlighting ongoing slack in capital utilization. On a year-over-year basis, the production index posted a modest 0.1% increase, underscoring the fragile nature of the recovery.
In corporate news, Midac Holdings (6564) advanced 3.42% after announcing the acquisition of Taiheikousan Inc. for 100 million yen, aiming to expand its presence in the Kanto region. Meanwhile, Welcia Holdings (3141) slid 0.36% following a disappointing earnings release: attributable profit fell 43.5% to 15 billion yen, despite a 5.6% increase in revenue. The company projects a 12.5 billion yen profit for H1 and a dividend of 18 yen per share. Elsewhere, SM Group confirmed plans to open 200 new Alfamart locations in Luzon, positioning itself as a challenger to 7-Eleven (3382), which dipped 0.46%.
Overall, while Monday’s gains were driven by short-term relief in external risk factors, policy unpredictability and modest domestic indicators continue to temper investor conviction. The next catalysts will likely come from upcoming tariff announcements and corporate earnings, both of which could shift near-term momentum in either direction. Traders should remain attentive to Washington’s trade policy developments and industrial output revisions to gauge the durability of the Nikkei’s recent strength.
Despite the benchmark's strong headline gain, underlying tone in the market was less enthusiastic, with several large-cap names closing in negative territory. This divergence reflects broader uncertainty linked to fluctuating U.S. trade policy, which continues to create headwinds for forward-looking investment strategies. Analysts remain skeptical about the sustainability of any relief rally, given the absence of long-term policy clarity.
Domestic macroeconomic data provided a mixed backdrop. Japan’s industrial production rose 2.3% in February, supported by a 3% uptick in shipments, suggesting demand-side resilience. Inventories declined 1.7%, a positive signal for supply-chain normalization, although production capacity dropped by 0.4% and the operating ratio fell 1.1%, highlighting ongoing slack in capital utilization. On a year-over-year basis, the production index posted a modest 0.1% increase, underscoring the fragile nature of the recovery.
In corporate news, Midac Holdings (6564) advanced 3.42% after announcing the acquisition of Taiheikousan Inc. for 100 million yen, aiming to expand its presence in the Kanto region. Meanwhile, Welcia Holdings (3141) slid 0.36% following a disappointing earnings release: attributable profit fell 43.5% to 15 billion yen, despite a 5.6% increase in revenue. The company projects a 12.5 billion yen profit for H1 and a dividend of 18 yen per share. Elsewhere, SM Group confirmed plans to open 200 new Alfamart locations in Luzon, positioning itself as a challenger to 7-Eleven (3382), which dipped 0.46%.
Overall, while Monday’s gains were driven by short-term relief in external risk factors, policy unpredictability and modest domestic indicators continue to temper investor conviction. The next catalysts will likely come from upcoming tariff announcements and corporate earnings, both of which could shift near-term momentum in either direction. Traders should remain attentive to Washington’s trade policy developments and industrial output revisions to gauge the durability of the Nikkei’s recent strength.