Japan’s Nikkei Stock Tracks Ends Higher as Markets Assess Trump’s Tariff Delay (UPDATE 1)

Reuters

12:11 JST, January 21, 2025 (updated at 16:35 JST)

TOKYO (Reuters) – Japan’s Nikkei share average ended higher in volatile trading on Tuesday, as investors found comfort in the possibility of a delay in tariff implementation by U.S. President Donald Trump.

The Nikkei closed 0.32% higher at 39,027.98, after rising as much as 0.86% earlier in the session.

The index flitted in and out of positive territory in early Asian hours. It also dropped about 0.66% after Trump said he was considering imposing 25% tariffs on Mexico and Canada as soon as Feb. 1. “After all, the issue about the new tariff was not new so the Nikkei’s gains and declines were both limited,” said Naoki Fujiwara, senior fund manager at Shinkin Asset Management.

The broader Topix ended flat at 2,713.5.

Uniqlo-brand owner Fast Retailing rose 1.09% to provide the biggest boost to the Nikkei. Shares of chip-making equipment maker Tokyo Electron ended 1.44% higher.

Drugmaker Chugai Pharmaceutical fell 1.79% to be the biggest drag in the benchmark index.

“The market is expected to remain volatile like this for a while as investors monitor outcome of the negotiations on the tariffs. The political factor will become a key for the equities,” said Hiroyuki Ueno, chief strategist at Sumitomo Mitsui Trust Asset Management.

Investors also await the Bank of Japan’s policy decision, due on Friday.

“Investors are seeking to know the pace of the BOJ’s rate hike,” said Yugo Tsuboi, chief strategist at Daiwa Securities.

The BOJ is expected to raise interest rates in a move that would lift short-term borrowing costs to levels unseen since the 2008 global financial crisis.

Of more than 1,600 stocks trading on the Tokyo Stock Exchange’s prime market, 56% of shares rose and 37% declined, with 5% trading flat.