tokyo stocks slip as yen strengthens and earnings loom

2025-04-21 general

Tokyo, Monday, 21 April 2025.
tokyo stocks faced a downturn. The nikkei average fell due to a stronger yen affecting major exporters. Investors are now closely watching us-japan trade talks and upcoming corporate earnings reports. The yen rose to a seven-month high of 140 against the dollar amid speculation of pressure to correct yen weakness. This adds uncertainty to the market already wary of potential impacts from trump’s tariff policies.

market overview

The Nikkei average experienced a significant drop of ¥429.93, or 1.24%, closing the morning session at ¥34,300.35 [1]. This downturn reflects investor anxiety over the yen’s appreciation and its potential impact on export-heavy sectors [1]. Market participants are also closely monitoring the ongoing U.S.-Japan tariff negotiations, which add another layer of uncertainty [1]. The combination of these factors has dampened the short-term optimism that had previously buoyed the market, leading to concerns about further declines [1].

yen’s impact on exporters

The rise of the yen against the dollar is a primary cause for concern, particularly for major exporters [3]. A stronger yen makes japanese products more expensive in international markets, potentially reducing their competitiveness and profitability [3]. Companies such as toyota, mazda and subaru experienced notable declines [3]. Conversely, companies that benefit from a strong yen, such as nitori holdings and kobe bussan, saw an increase in buying interest [3].

trump’s trade policy concerns

Adding to the market’s unease is former president trump’s stance on trade, particularly his remarks about japan’s automobile safety standards [3]. Trump described these standards as ‘protectionist trade barriers’, raising concerns about potential trade actions [3][5]. These comments inject further uncertainty into the us-japan trade negotiations, weighing on investor sentiment [3]. The market is cautiously awaiting further developments, recognizing that trump’s policies could significantly impact japanese equities [5].

analyst perspectives and market outlook

Analysts suggest a cautious approach, advising investors to monitor tariff negotiations and corporate forecasts closely [6]. One analyst noted that the market is ‘cautiously optimistic, but trump’s trade policies remain a major uncertainty’ [6]. Technical analyst itou tomohisa suggests that if the nikkei average fails to hold above ¥34,224, it could signal a move to test lower levels, potentially revisiting the april 7 low of ¥30,792 [7]. Conversely, a sustained rise could lead to a target of ¥36,000 or higher during april [7].

afternoon trading sees further decline

The nikkei average’s decline accelerated in the afternoon session, with the decrease exceeding ¥500 compared to the previous week’s close [2]. This drop occurred amid continued yen appreciation, prompting some overseas investors to sell stock index futures [2]. The tokyo prime market saw an estimated turnover of ¥1.7641 trillion, with 821.52 million shares traded [2]. Toyota and sony group further extended their losses, while nippon ham and toho showed gains [2].

Bronnen

stock market yen appreciation