Japan Stocks Slide as Tariff, Election Caution Weigh
Japanese stocks fell as Donald Trump’s threat of fresh tariffs on Europe and uncertainty ahead of an expected domestic election sapped risk appetite.
Food-related shares provided some support, however, gaining on expectations of a consumption tax cut.
Topix Index fell 0.1% to 3,656.40 as of market close in Tokyo
Out of 1,664 stocks in the index, 583 rose and 1,027 fell, while 54 were unchanged
Nikkei declined 0.7% to 53,583.57
Internationally-exposed sectors like autos and and tech were among the heaviest drags on the Topix, with Toyota falling 1.3%.
Japan’s decline followed a drop in US stock futures after President Trump announced new tariffs on eight European countries who’ve supported Denmark in his pursuit of Greenland.
“Conflict between the US and Europe over Greenland, along with worries about Fed independence, are driving a cautious mood in Japan’s market,” said Yutaka Miura, senior technical analyst at Mizuho.
Jitters around fiscal policy ahead of an expected start of an election period are also weighing on sentiment, according to Atsushi Sato, general manager of the securities investment department at Fukoku Mutual Life Insurance.
Prime Minister Sanae Takaichi is set to lay out her plans for an election at a news conference later Monday. Both her ruling bloc and opposition parties are mulling cutting the sales tax on food purchases ahead of the potential vote, according to local media reports.
Worries that such a policy could exacerbate Japan’s fiscal burden were reflected in a rise in long-term bond yields Monday. “It’s become difficult to predict the ceiling for long-term yields, and fiscal concerns are also dragging down the stock market,” said Sato.
However, expectations that a tax cut would fuel consumption were a tailwind for food-related shares, with supermarket operators like Aeon, Daikokutenbussan, Life and Blue Zones among the Topix’s best performers. Seasonings maker Ajinomoto also gained 6.1%.
“Ruling and opposition parties seem to be moving toward lowering the consumption tax, which is bound to be supportive for food retailers,” said Mizuho’s Miura. (asd)
Sumber: Bloomberg
