Japan’s Nikkei market reaction stayed flat on Wednesday as political and trade concerns weighed on investor sentiment.
The Nikkei index dipped 0.04% to close at 39,663.4. Meanwhile, the broader Topix index fell 0.21% to 2,819.4. Uncertainty about Japan’s upcoming upper house election and U.S. trade negotiations dominated market discussions.
Shigetoshi Kamada of Tachibana Securities said investors lacked clear motivation to take positions. “They’re hesitating,” he noted. “The election result and trade deadline both create uncertainty.”
Polls suggest Prime Minister Shigeru Ishiba’s ruling coalition might lose its upper house majority on July 20. If that happens, Ishiba may need to partner with smaller parties pushing for easier monetary and fiscal policies.
At the same time, investors remain focused on the August 1 trade deadline with the United States. Local reports suggest Prime Minister Ishiba plans to meet U.S. Treasury Secretary Scott Bessent this Friday in Tokyo.
Without a deal, Japan could face a steep 25% tariff, sparking concern for exporters. Despite these headwinds, some tech stocks posted gains. Tokyo Electron rose 1.75%, and Advantest gained 0.64%.Both followed Nvidia, which jumped 4% after announcing it would restart sales of its H20 AI chip to China.
Nvidia’s rise also pushed the Nasdaq Composite to a record close overnight. Entertainment stock Toho soared 10.09% after revising its annual profit forecast upward.
However, Fast Retailing, owner of Uniqlo, slipped 0.91% and weighed down the Nikkei index. Toyota Motor dropped 0.89%, despite the yen falling to its lowest level in over three months. “Tariff fears are holding back Toyota,” Kamada explained. “The weak yen couldn’t boost buying interest.”
Overall, the Nikkei market reaction reflects a cautious approach as multiple risks remain unresolved. Investors continue watching political developments and global trade talks closely before making significant moves.
Until clarity emerges, the Nikkei market reaction may remain sluggish and reactive.
