Nikkei up over 2% on eased fears of US tariff impact on economy
At 11:00 a.m., the 225-issue Nikkei Stock Average rose 776.10 points, or 1.89 percent, from Wednesday to 41,947.42. The broader Topix index was up 53.55 points, or 1.83 percent, at 2,979.93, after briefly rising to a record high on an intraday basis.
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Japan Today
40 minutes ago
- Japan Today
Nikkei likely to stay above 40,000 despite political uncertainty
A financial data monitor in Tokyo shows the Nikkei Stock Average climbing above 42,000 on July 24, 2025. (Kyodo) ==Kyodo By Risako Nakanishi Boosted by a Japan-U.S. trade deal, the Nikkei stock index is expected to stay afloat above the 40,000 threshold at least for a while, despite political uncertainty created by the major setback suffered by Japan's ruling parties in a recent national election. The benchmark may soon break its record high by surpassing 42,224.02 registered a year ago, but the market could face a downside risk if long-term interest rates surge further due to expectations of expansionary fiscal measures like a consumption tax cut. "With uncertainty over tariff negotiations dispelled, it makes it easier for companies to foresee future earnings, helping to support the stock market," said Maki Sawada, a strategist at the Investment Content Department of Nomura Securities Co. The Nikkei added more than 2,000 points over the two days through Thursday after the agreement that U.S. tariffs on imported Japanese cars and other goods will be lowered sharply to 15 percent, although the yield on the key 10-year government bond spiked to 1.600 percent, its highest level since 2008. "As long as higher interest rates are accompanied by improving business performance, stocks will rise as seen in the past," Sawada said, expecting the index to be supported around the 40,000 line. The market is likely to be buoyed by hopes for upward revisions in earnings after some major companies like Toyota Motor Co. projected a hefty 35 percent drop in net profit for this fiscal year by factoring in an additional 25 percent tariff imposed by Washington from April. Trade data show that Japan's shipments to the United States, the largest export destination for Japanese automakers, dropped 11.4 percent in value terms in June from a year earlier for the third consecutive monthly decline, contributing to a 30.8 percent plunge in its trade surplus with the country. "Stocks may be further lifted by positive incentives like more U.S. trade deals with the European Union and China, as well as economic data and earnings," possibly sending the Nikkei to the 44,000 level at one point, said Masahiro Yamaguchi, head of investment research at SMBC Trust Bank. While many analysts believe the current level of long-term interest rates at around 1.6 percent is unlikely to be an obstacle for stocks to chase higher ground, a spike toward 2 percent may stir concerns about increased borrowing costs and dent market sentiment. Situations surrounding the bond market suggest the likelihood of the yield climbing further, as the Japan-U.S. trade deal helped ease concern about the prospects of the domestic economy and will make it easier for the Bank of Japan to further raise interest rates. The tariff deal is a "big step forward," as it reduces economic uncertainty facing Japanese companies under U.S. President Donald Trump's trade policy, BOJ Deputy Governor Shinichi Uchida said Wednesday. His remark fueled speculation that the central bank will increase the policy rate again after raising it three times since March last year to around 0.50 percent, as it shifts from a decade of unorthodox monetary easing. "Given that the tariff negotiations ended up with a desirable agreement despite expectations of tough going, the recession risk in the second half of this year has alleviated considerably," said Daiju Aoki, chief Japan economist at UBS SuMi TRUST Wealth Management Co. "Japan's interest rates are likely to remain elevated with the probability of a rate hike by the end of year increasing significantly," Aoki said, adding that investors will adopt a cautious stance about buying bonds, whose prices move inversely to yields. Reflecting expectations for weakening demand, the auction for 40-year government bonds held Wednesday was sluggish, with the bid-to-cover ratio standing at 2.13 percent, its lowest level since 2011. Higher yields also followed on from the results of Sunday's House of Councillors election, which raised the possibility that expansionary fiscal measures may be adopted in the future, leading to further deterioration in Japan's fiscal health. The Liberal Democratic Party and its coalition partner Komeito suffered a major setback in the election, losing their majority in the upper house, with opposition forces urging that the consumption tax be cut, suspended, or even abolished to ease the pain of inflation. The ruling coalition, meanwhile, pledged to deliver cash handouts, which are likely to require fewer financial resources. "Currently the key long-term yield remains at around 1.6 percent, as there have not been specific moves leading to stimulus measures such as reducing the consumption tax," said Yutaka Miura, senior technical analyst at Mizuho Securities Co. "But if such moves come into sight, such as opposition parties starting to request such measures, the yield could climb further," he said, adding that it could affect negatively to the stock market if it rises to between 1.7 and 1.8 percent. © KYODO
Nikkei Asia
10 hours ago
- Nikkei Asia
Japan firms may rethink US study abroad over Trump policy: survey
The Trump administration's policies are putting pressure on Harvard and other top U.S. universities. © Reuters YOHEI KAWAI TOKYO -- Nearly a third of major Japanese companies say they may consider changes to policies for sending employees to study in the U.S., a Nikkei survey shows, as universities come under fire from Washington. Top U.S. universities face growing pressure from the Trump administration, which has tried to stop Harvard University from accepting international students, leaving Japanese companies looking for alternatives.
Nikkei Asia
11 hours ago
- Nikkei Asia
Taiwan crisis would 'immediately affect' Europe: Czech president
Czech Republic President Petr Pavel sits for an interview in Tokyo on July 25. (Photo by Shintaro Ino) SHIGERU SENO TOKYO -- A crisis involving Taiwan would have a ripple effect reaching all the way to Europe, Petr Pavel, president of the Czech Republic, told Nikkei in an exclusive interview. "War in the region would severely harm all the flow of goods globally," Pavel said Friday during his stay in Tokyo. "From a European point of view, any conflict in this region would immediately affect the economic situation in Europe."
