Japan’s Nikkei Stock Pares Gains as Market Weighs U.S.-China Tariffs (UPDATE 2)

Reuters

10:16 JST, February 4, 2025 (updated at 16:35 JST)

TOKYO (Reuters) – Japan’s Nikkei share average rose on Tuesday after U.S. President Donald Trump suspended his threat of steep tariffs on Mexico and Canada, before paring some gains as tit-for-tat levies ensued between the U.S. and China.

The Nikkei rose as much as 1.8% as investors bought back shares after the benchmark index logged its worst session in four months on Monday.

It closed up 0.7% at 38,798.37, while the broader Topix finished 0.7% higher at 2,738.02.

Trump agreed to a 30-day pause before engaging in further negotiations with neighboring Canada and Mexico, alleviating immediate fears that rattled global markets on Monday.

However, the 10% tariff Trump had vowed to impose on China came into effect at 0501 GMT, which the world’s second-biggest economy quickly retaliated against, imposing levies on some U.S. imports.

“The market is still playing with the day-to-day tariff talk,” said Naka Matsuzawa, chief macro strategist at Nomura Securities.

While the U.S. has little to gain by hurting the Canadian and Mexican economies through tariffs, it’s a “totally different story” when it comes to its economic rival China, he said.

“It’s still highly unpredictable, but you can kind of see through what Trump says and does.”

Japanese automakers were among stocks to rise, after falling in the previous session when investors weighed how tariffs on Mexico might impact auto production. Several automakers have factories in Mexico.

The auto sub-index climbed 1.4% to be one of the top performers among the Tokyo Stock Exchange’s 33 industry groups, while Toyota Motor finished up 1.7%.

Among individual stocks, domestic company revenue reports created some of the biggest percentage winners and losers on the Nikkei.

Ceramics maker Kyocera soared 7.3% and Murata Manufacturing jumped 5.6%. Mitsubishi Motors slid 14.7% to the bottom of the pack.