U.S.-Japan Trade Tensions Weighed On Stocks In Tokyo Trading

Akira Ito
19 May, 2025
Tokyo

Japan's stock market indexes turned lower in Monday's trading amid lingering U.S. trade policy uncertainties and renewed worries about the U.S. debt profile. 

The Nikkei 225 Stock Average decreased 0.7%, and the broader Topix fell 0.1% after Moody's Ratings downgraded the U.S. debt rating. 

Moody's lowered its credit rating by one notch from the top notch Aaa to Aa1 and changed the outlook to stable from negative. 

"Successive US administrations and Congress have failed to agree on measures to reverse the trend of large annual fiscal deficits and growing interest costs," the rating agency noted in its update. 

The latest budget proposal prompted the rating agency to revise its outlook, as budget analysts across all political ideologies raised concerns. 

"We do not believe that material multi-year reductions in mandatory spending and deficits will result from current fiscal proposals under consideration. 

Over the next decade, we expect larger deficits as entitlement spending rises while government revenue remains broadly flat. In turn, persistent, large fiscal deficits will drive the government's debt and interest burden higher," the rating agency added in its note. 

The agency estimated federal debt to increase to around 134% of GDP and 9% of GDP by 2035, up from 98% and 6.4% in 2024, respectively.  

 

Japan Indexes and Stocks 

The Nikkei 225 Stock Average declined 0.7% to 37,498.63, and the broader Topix index dropped 0.1% to 2,738.39. 

Chipmakers led the decliners in Tokyo, tracking losses in Friday's trading on Wall Street in New York. 

Advantest Corp. declined 2.9% to ¥7,066.0, Tokyo Electron decreased 1.7% to ¥23,065.0, and Disco Corp. fell 1.5% to ¥34,610.0. 

Daiichi Sankyo Co. Ltd. surged 7.5% to ¥3,698.0, and the company's stock was the best performer in the benchmark index, arresting the broader decline in the Nikkei 225 Stock Average.