TOKYO: Japanese shares fell more than 1% on Thursday, as automakers declined due to a stronger yen, while investors assessed the potential impact of US President Donald Trump’s latest tariff threat.
The Nikkei fell 1.36% to 38,630.81 by 0203 GMT, while the broader Topix was down 1.27% to 2,732.18.
“The yen’s strength against the dollar and uncertainties about the US tariff policy pushed Japanese equities lower,” said Naoki Fujiwara, senior fund manager at Shinkin Asset Management.
The yen rose to a more than two-month high of 150.52 per dollar, helped by a flight to safety over worries about the impact of Trump’s tariffs and bets of more Bank of Japan (BOJ) rate hikes this year.
A stronger Japanese currency tends to hurt exporters, as it decreases the value of overseas profits in yen terms when firms repatriate them to Japan. Automakers lost ground, with Toyota Motor falling 2.3% to drag the Topix the most.
Honda Motor and Nissan Motor slipped 2.45% and 4.22%, respectively.
Uncertainties about Trump’s tariff plans also weighed on automakers. Trump said on Wednesday he would announce tariffs related to lumber, cars, semiconductors and pharmaceuticals “over the next month or sooner.”
Japanese banks also fell, snapping a rally driven by expectations for a BOJ policy shift.
Mitsubishi UFJ Financial Group slipped 2.4% and Mizuho Financial Group lost 2.4%. Meanwhile, worries about higher interest rates also weighed on sentiment.
On Wednesday, BOJ board member Hajime Takata called more rate hikes to avoid the inflation risk.
Japan’s Nikkei gains as investors pick up banks and defence shares
“What he said was quite true but the market reacted sensitively to his comments because there were no other major market-moving cues after the corporate earnings season ended,” said Shinkin Asset Management’s Fujiwara.
Among individual stocks, Shiseido extended gains fuelled by news that investment group Independent Franchise Partners is a shareholder of the cosmetics maker.