Investor Sentiment Improves as Trade Tensions Cool, but Chip Stocks Weigh on Gains
Tokyo’s Nikkei 225 closed higher on Thursday, tracking overnight gains on Wall Street, as investor concerns over U.S. tariff policies eased following reports that President Donald Trump may delay auto tariffs on Canada and Mexico. However, declines in chip-related stocks capped the market’s overall advance.
The Nikkei 225 index rose 0.77% to close at 37,704.93, while the broader Topix jumped 1.22% to 2,751.41, reflecting renewed optimism in Japan’s equity markets.
US Tariff Delay Boosts Market Confidence
Global investors closely monitored developments on U.S. trade policy, as concerns about potential tariffs on automobile imports and their impact on major economies had weighed on market sentiment in recent weeks.
Wall Street’s main indexes finished higher on Wednesday in volatile trading, driven by a report suggesting that Trump was considering a one-month delay on auto tariffs affecting Canada and Mexico. The rally gained further momentum after the White House confirmed that certain vehicle tariffs would be postponed.
This easing of trade tensions reassured Japanese market participants, reducing fears that harsh U.S. trade policies could disrupt global supply chains and dampen growth in key sectors, particularly automobiles and heavy machinery.
Expert Market Insights
According to Shuutarou Yasuda, market analyst at Tokai Tokyo Intelligence Laboratory,
“Market players remain cautious about the U.S. tariff policy, but now they expect Trump would not execute anything that could hurt the global economy.”
This shift in investor expectations helped drive gains in Japanese automakers, heavy machinery manufacturers, and retail giants.
Top Performers: Automakers and Heavy Machinery Stocks Rally
Retail and Automotive Stocks Gain Momentum
- Fast Retailing, the company behind the Uniqlo brand, rose 1.17%, making it the biggest contributor to the Nikkei’s gains.
- Honda Motor Co. gained 2%, while Nissan Motor Co. advanced 1%, as the outlook for the automobile industry improved following the tariff delay.
Heavy Machinery Stocks Surge After Goldman Sachs Upgrade
- Mitsubishi Heavy Industries soared 10.79% after Goldman Sachs upgraded its rating and target price for the stock.
- Kawasaki Heavy Industries also saw strong buying action, surging 7.29% on positive investor sentiment.
Chip and Tech Stocks Face Pressure Amid Industry Uncertainty
Despite the broad-based gains, chip-related stocks weighed on the Nikkei 225, reflecting growing concerns about a slowdown in the global semiconductor industry.
- Tokyo Electron, a leading chip-making equipment manufacturer, fell 1.16%.
- Advantest, a chip-testing equipment maker, declined 0.84%.
Analysts pointed to weakening demand for semiconductor products and Nvidia’s cautious outlook last month as signs that the sector may have reached a cyclical peak.
“The market now sees the growth of the global chip industry had peaked after they saw Nvidia’s outlook last month,” Yasuda noted.
Additionally, cable manufacturers, which serve as an indicator for data center investments, also saw losses, with:
- Furukawa Electric falling 3.47%.
- Fujikura declining 1.75%.
Market Breadth and Trading Activity
- Out of more than 1,600 stocks trading on the Tokyo Stock Exchange’s prime market, 78% of stocks advanced, while 19% declined, and 1% remained flat.
- Investor confidence was broad-based, with gains across retail, automotive, heavy industry, and financial sectors, although weakness in semiconductors limited the overall upside.
Looking Ahead: Japan’s Market Outlook
With trade tensions between the U.S. and key global economies showing signs of easing, Japanese equities may continue to benefit from improving sentiment in the global markets. However, uncertainty surrounding the semiconductor sector and global economic growth could keep investors cautious in the coming sessions.
As corporate earnings season continues, traders will closely watch economic data, monetary policy decisions from the Bank of Japan, and further trade-related developments to gauge the next direction for the Nikkei 225 and Topix indices.
