Japan's GDP Contracts In First Quarter, Nikkei 225 Edges Higher After a Week of Volatile Trading

Akira Ito
16 May, 2025
Tokyo

Japan's stock market indexes declined for the third consecutive day as investors shifted their attention to corporate earnings outlook and GDP growth data. 

The Nikkei 225 Stock Average and the broader Topix index inched slightly lower after Japan's economic activities contracted in the first quarter. 

GDP shrank 0.2% in the first quarter after expanding by 0.6% in the fourth quarter, the Cabinet Office said on Friday. 

The economy contracted for the first time in over a year because of the impact of the U.S. trade policy and weak demand from key trading partners. 

Private consumption, which accounts for half the GDP, was essentially unchanged, and government spending was flat after rising in the previous three quarters. 

Net international trade dragged the GDP down by 0.8 percentage points after imports overwhelmed exports in the quarter. 

On an annual basis, the economy contracted by 0.7%, after rising in the previous two quarters. 

 

Japan Indexes and Stocks 

The Nikkei 225 Stock Average decreased 0.1% to 37,739.53, and the broader Topix index eased 0.01% to 2,738.68. 

For the week, the Nikkei 225 Stock Average and the Topix advanced 0.3% and extended gains for the sixth consecutive week. 

The Japanese yen traded at 145.14 against the U.S. dollar after the weak GDP data confirmed the Bank of Japan's downbeat economic outlook released a week ago.  

Automakers and electronics exporters remained in focus for the fifth week in a row amid a surge in U.S. tariffs and uncertain trade policy. 

Toyota Motor declined 0.5% to ¥2,645.0, Honda Motor decreased 0.2% to ¥1,401.0, and Nissan Motor rose 4.6% to ¥356.70. 

Shipping companies traded volatile amid uncertainty about the U.S.-Japan trade negotiations. 

Nippon Yusen rose 1.5% to ¥5,265.0, Mitsui O.S.K. Lines advanced 0.6% to ¥5,200.0, and Kawasaki Kisen Kaisha added 2.5% to ¥2,197.0.