Japanese Stocks Drop as Investors Await US Tariff Letters
Japanese equities fell in nervous trading after US President Donald Trump said tariff letters would start being delivered from noon Monday.
Trump also said he would put an additional 10% tariff on any country aligning themselves with “the Anti-American policies of BRICS.”
Topix Index fell 0.6% to 2,811.72 as of market close in Tokyo Nikkei declined 0.6% to 39,587.68
Mitsubishi UFJ Financial Group Inc. contributed the most to the Topix’s decline, decreasing 2.3%. Exporters including electric appliances and transportation equipments fell, while financials also dropped amid economic uncertainty.
Japan’s chief trade negotiator Ryosei Akazawa held two phone meetings with Commerce Secretary Howard Lutnick and the two sides reaffirmed their respective positions on the US tariffs, according to a statement by Japan’s Cabinet Secretariat. Separately, Prime Minister Shigeru Ishiba said Japan is ready to “stand firm” and defend its interests. He spoke on Fuji TV’s “Sunday News The Prime” program.
Their comments come as a 10% across-the-board levy on Japan’s shipments to the US is set to revert back to 24% on July 9 barring a deal. The country is also subject to a 25% levy on cars and auto parts and a 50% tariff on steel and aluminum. Ishiba said he will be pushing for zero tariffs on automobiles.
Caution also prevailed ahead of an upper house election scheduled to be held on July 20.
Rieko Otsuka, a strategist at MCP Asset Management Japan, said that with the election coming up, the Japanese government cannot easily compromise on sectors like autos and agriculture “in trade talks”.
Domestically, investors will also be focusing on the earnings season that kicked off with Yaskawa Electric Corp. cutting its full-year operating income guidance. Yaskawa’s shares fell 10%, the most since April 7.
Source: Bloomberg
