Tokyo Stocks Rise on US Tariff Relief and Domestic Consumption Boost
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Japanese equity markets edged higher on Wednesday, lifted by a combination of improving domestic retail figures and relief on the global trade front.The Nikkei 225 advanced 0.57%, or 205.39 points, closing at 36,045.38, supported by investor optimism after U.S. President Donald Trump signed an executive order rolling back tariffs on foreign automobiles and components.
The executive action exempts imported vehicles and parts—including aluminum and steel—from certain duties, specifically those targeting trade partners such as Canada and Mexico. The announcement triggered a positive read-through for Japanese automakers and suppliers with significant U.S. exposure, fueling modest risk-on sentiment in the Tokyo session. The move is interpreted as a potential de-escalation in broader trade tensions, although U.S.–China tariffs remain largely intact.
Beijing has reportedly scaled back some levies on U.S. semiconductors and pharmaceuticals in a reciprocal gesture, yet American duties on Chinese goods persist, contributing to declining bilateral cargo volumes and reigniting fears of supply chain disruptions and employment contraction in key export sectors.
Domestic macro data added to the constructive tone. Retail sales in Japan surged 3.1% year-on-year in March to ¥14.06 trillion, an acceleration from February’s 1.3% growth. The expansion was led by stronger demand in food, machinery, and fuel categories, according to the Ministry of Economy, Trade and Industry. Commercial sales were also robust, rising 3.5% to ¥57.06 trillion, while wholesale trade advanced 3.6% to ¥43 trillion.
However, industrial production contracted 1.1% month-on-month and fell 0.3% on an annual basis, primarily dragged down by output declines in the automotive and electronics sectors. Output is projected to rebound 1.3% in April and accelerate to 3.9% in May, suggesting a short-term bottoming in the manufacturing cycle.
Forward-looking indicators painted a mixed picture. Japan’s leading index slipped to 107.9 in February from 108.2, pointing to a softer macro outlook. Meanwhile, the coincident index rose to 117.3—its highest level since September 2019—indicating resilience in current economic activity.
Earnings updates reflected divergent corporate performance. Mabuchi Motor (6592) posted a 51% decline in quarterly profit to ¥3.33 billion, as EPS halved to ¥26.46 despite a 4.2% revenue increase to ¥46.96 billion. The results underscore margin compression despite topline growth, likely linked to cost pressures and softening end-market demand.
Chudenko (1941) delivered a strong set of full-year results, with net profit more than doubling to ¥19.90 billion and EPS at ¥366.71. The company guided for a 21% earnings decline in the coming fiscal year, reflecting expected normalization post-outperformance. It announced a ¥60 year-end dividend, with a full-year payout projected at ¥130.
Marudai Food (2288) revised its profit forecast upward to ¥5.4 billion, while trimming its sales outlook to ¥234.9 billion. The company reported a ¥578 million impairment, but left its dividend guidance unchanged, signaling balance sheet resilience despite near-term pressures.
As Tokyo markets digest global policy signals and domestic data, attention will now shift to follow-through on U.S.–China trade talks and the trajectory of Japan’s industrial recovery. Near-term momentum remains constructive but will hinge on earnings revisions, production recovery, and geopolitical clarity.
The executive action exempts imported vehicles and parts—including aluminum and steel—from certain duties, specifically those targeting trade partners such as Canada and Mexico. The announcement triggered a positive read-through for Japanese automakers and suppliers with significant U.S. exposure, fueling modest risk-on sentiment in the Tokyo session. The move is interpreted as a potential de-escalation in broader trade tensions, although U.S.–China tariffs remain largely intact.
Beijing has reportedly scaled back some levies on U.S. semiconductors and pharmaceuticals in a reciprocal gesture, yet American duties on Chinese goods persist, contributing to declining bilateral cargo volumes and reigniting fears of supply chain disruptions and employment contraction in key export sectors.
Domestic macro data added to the constructive tone. Retail sales in Japan surged 3.1% year-on-year in March to ¥14.06 trillion, an acceleration from February’s 1.3% growth. The expansion was led by stronger demand in food, machinery, and fuel categories, according to the Ministry of Economy, Trade and Industry. Commercial sales were also robust, rising 3.5% to ¥57.06 trillion, while wholesale trade advanced 3.6% to ¥43 trillion.
However, industrial production contracted 1.1% month-on-month and fell 0.3% on an annual basis, primarily dragged down by output declines in the automotive and electronics sectors. Output is projected to rebound 1.3% in April and accelerate to 3.9% in May, suggesting a short-term bottoming in the manufacturing cycle.
Forward-looking indicators painted a mixed picture. Japan’s leading index slipped to 107.9 in February from 108.2, pointing to a softer macro outlook. Meanwhile, the coincident index rose to 117.3—its highest level since September 2019—indicating resilience in current economic activity.
Earnings updates reflected divergent corporate performance. Mabuchi Motor (6592) posted a 51% decline in quarterly profit to ¥3.33 billion, as EPS halved to ¥26.46 despite a 4.2% revenue increase to ¥46.96 billion. The results underscore margin compression despite topline growth, likely linked to cost pressures and softening end-market demand.
Chudenko (1941) delivered a strong set of full-year results, with net profit more than doubling to ¥19.90 billion and EPS at ¥366.71. The company guided for a 21% earnings decline in the coming fiscal year, reflecting expected normalization post-outperformance. It announced a ¥60 year-end dividend, with a full-year payout projected at ¥130.
Marudai Food (2288) revised its profit forecast upward to ¥5.4 billion, while trimming its sales outlook to ¥234.9 billion. The company reported a ¥578 million impairment, but left its dividend guidance unchanged, signaling balance sheet resilience despite near-term pressures.
As Tokyo markets digest global policy signals and domestic data, attention will now shift to follow-through on U.S.–China trade talks and the trajectory of Japan’s industrial recovery. Near-term momentum remains constructive but will hinge on earnings revisions, production recovery, and geopolitical clarity.