Reuters

Japan’s Nikkei Stock Average Falls after Sharp Gains as US-Japan Trade Talk Weighs

Yomiuri Shimbun file photo
The Tokyo Stock Exchange

Reuters

12:09 JST, July 1, 2025

TOKYO, July 1 (Reuters) – Japan’s Nikkei share average slipped on Tuesday as investors sold stocks after the index’s sharp gains, and uncertainties around the U.S.-Japan trade talks weighed on sentiment.

As of 0210 GMT, the Nikkei .N225 was down 1.1% at 40,048.14. It is set to snap a five-session winning streak that pushed it to its highest level since mid-July in the previous session.

The broader Topix .TOPX slipped 0.87% to 2,828.15.

“The market was overheated, but there were some factors that boosted demand last month,” said Hiroyuki Ueno, chief strategist at Sumitomo Mitsui Trust Asset Management.

Japanese equities mirrored a rally in U.S. stocks in the past several sessions, but demand was also supported by dividend payouts investors received after corporate shareholders’ meetings in June, as well as corporate share buybacks, said Ueno.

The Nikkei rose 6.6% in June, marking its biggest monthly gain since February 2024. In the last five sessions of June, the index gained 5.5%.

The Relative Strength Index (RSI), a technical measure for an investment momentum, dropped to 67.6 on Tuesday from the “overbought” condition of 74.5.

Meanwhile, U.S. President Donald Trump expressed frustration with U.S.-Japan trade negotiations on Monday, casting clouds over ongoing trade talks between the two countries.

U.S. Treasury Secretary Scott Bessent also warned that countries could be notified of sharply higher tariffs as a July 9 deadline approaches despite good-faith negotiations.

“Investors weighed trade factors, but if the outlook of the talks becomes clear, then the market gauges stocks with fundamentals and the Nikkei has the potential to rise further,” said Ueno.

Uniqlo-brand owner Fast Retailing 9983.T fell 3.3% to drag the Nikkei the most. Chip-equipment maker Tokyo Electron 8035.T slipped 1.52%.

Bucking the trend, cable maker Fujikura 5803.T jumped 2.2% to become the biggest percentage gainer on the Nikkei.