Japan’s Nikkei Stock Average Closes Lower after Trump Pledges Fresh Tariffs (UPDATE 2)

Reuters

10:43 JST, November 26, 2024 (updated at 17:00 JST)

TOKYO (Reuters) – Japan’s Nikkei share average declined on Tuesday as the market weighed U.S. President-elect Donald Trump’s pledge to impose tariffs on all imports from Canada and Mexico, along with additional tariffs on China.

The Nikkei index closed 0.9% lower at 38,442, after sliding nearly 2% during morning trade. The broader Topix finished about 1% at 2,689.55.

Trump said on Monday that on his first day in office he would impose a 25% tariff on all products from Mexico and Canada and an additional 10% tariff on goods from China, citing concerns over illegal immigration and trade of illicit drugs.

Of the Nikkei’s 225 constituents, 147 declined while 75 advanced, with losses narrowing in afternoon trade as investors digested the news. Three shares were untraded.

“Ten percent across the board (for China) is not as big as the one that he was talking about, 60%. But it still came in a more concrete way, so I think the initial reaction was rather negative,” Nomura’s chief macro strategist Naka Matsuzawa said.

The 25% tariff plans on imports from Canada and Mexico were probably bigger than the market expected, he added.

Chip-related stocks led losses, with Advantest down 4.3% to become the biggest drag on the Nikkei. Tokyo Electron tumbled 2.1%.

Microchip equipment maker Lasertec Corp was one of the biggest percentage losers with a 5.5% drop, behind electronics component maker Fujikura, down 6.8%.

Major automakers also slid, with Toyota Motor and Honda Motor slipping 1% and 1.9%, respectively.

The machinery sector lost 1.4%. Mitsubishi Heavy Industries stumbled 3.3%, while Kawasaki Heavy Industries shed 5.4%.

Shares of IHI were down 4.9%, with news that Japan’s space agency has halted an engine combustion test of its Epsilon S rocket after a fire broke out at the test site also weighing on sentiment.