Tariff Uncertainties Drag Down Japan Indexes 4% This Week, Retail Sales and Tokyo-Area Inflation Weighs

Akira Ito
28 Feb, 2025
Tokyo

Stock market indexes in Tokyo turned sharply lower amid escalating trade tensions and rising U.S. economic policy uncertainty. 

The Nikkei 225 stock average declined nearly 3%, and the broader TOPIX fell 2%, and they extended weekly losses to 4% and 2%, respectively.

Stocks in Japan and in Asia plunged after the U.S. president confirmed the start of a 25% tariff on goods shipped from Mexico and Canada from March 4. 

In addition, the White House imposed an additional 10% tariff on top of the previously announced 10% tariffs a month ago on Chinese exports, increasing the total import tax on some Chinese products to as high as 60%.

The sharp escalation of tariffs weighed on the market sentiment, and softer-than-expected economic data also accelerated the market decline. 

Tokyo-area consumer price inflation eased to 2.9% in February from 3.4% in January, according to data from the Ministry of Internal Affairs.

Local education subsidies and energy price relief played a role in keeping inflation down. 

Consumer prices, which exclude food prices, rose 2.2%, and core inflation, which excludes food and energy prices, held steady at 1.9%.

Japan's retail sales in January advanced 3.9%, up from a downwardly revised 3.5% in December, according to the latest data available from the Ministry of Economy, Trade & Industry. 

Retail sales advanced for the 34th month in a row and rose at the fastest pace since February 2024, driven by a steady rise in wages. 

On a monthly basis, retail sales increased 0.5%, rebounding from an upwardly revised 0.8% decrease in December.

Another report by the ministry showed industrial production declined in January from the previous month by 1.1%, following a 0.2% fall in the previous month and extending losses to the third consecutive month. 

On an annual basis, industrial production increased 2.6%, rebounding from a loss of 1.6% in December, and the first increase in three months. 

 

Japan Indexes and Stocks 

The Nikkei 225 Stock Average declined 2.9% to 37,155.50, and the broader TOPIX dropped 2% to 2,682.09.

Semiconductor equipment makers faced selling in Friday's trading and extended weekly losses, tracking the decline in overnight trading in New York. 

Tokyo Electron, Advantest, Disco Corp., and Lasertec Corp. fell between 6% and 9%.