Nikkei Ascends Amid US-Japan Tariff Discussion Anticipation

In Hong Kong, Japan’s Nikkei average experienced a slight increase on Wednesday. Investors are keenly observing the progress of tariff discussions between the United States and Japan. This places the Nikkei on a trajectory to potentially achieve its first monthly gain since December.

The Nikkei concluded the morning session with a 0.2% rise, registering at 35,902.51, after an initial dip into negative territory earlier in the trading day.

The index is currently on track for its fifth consecutive session of gains, marking its most extended winning streak since August of the previous year.

The broader Topix index also saw an increase, adding 0.4% to reach 2,660.24.

Ryosei Akazawa, Japan’s leading trade negotiator, conveyed his intention to achieve consistent advancement in tariff negotiations with the U.S. He is scheduled to travel to Washington later today to engage with his counterparts in a second round of discussions.

Recent data indicates that Japan’s factory output for March experienced a greater decline than anticipated. This downturn was primarily influenced by the critical motor vehicle sector, as manufacturers continue to be affected by U.S. President Donald Trump’s tariff policies.

Analyst Insights

Shuutarou Yasuda, a market analyst at Tokai Tokyo Intelligence Laboratory, commented that the Nikkei’s advances were somewhat restricted as investors await further developments in the tariff talks.

Yasuda added that for the Nikkei to achieve further upward momentum, a tangible indication, such as an accord between Japan and the U.S., is necessary.

The benchmark index has largely recovered from the tariff-related shocks announced earlier in April, gaining 0.8% thus far in April and aiming to conclude its first month in positive territory since December.

Market stability has been largely restored in recent weeks due to optimism surrounding the easing of trade tensions. The Nikkei’s rebound was also supported by a shift away from U.S. assets amidst tariff-related uncertainty.

Among the top 30 core Topix constituents, Sony Group emerged as the top gainer on Wednesday, with a notable increase of 5.11%. This followed reports that the group is considering a spin-off of its semiconductor division, a strategic move that could unlock value within the company.

Conversely, Hitachi was among the underperforming stocks, declining by 4.8%, followed by Fast Retailing, which experienced a 2.4% decrease. Concurrently, the Bank of Japan (BOJ) is anticipated to maintain its current interest rates at its two-day policy meeting concluding on Thursday.

Generally, a weaker yen tends to favor Japanese equities by enhancing the value of exporters’ international revenues. Last month, Trump accused Tokyo of implementing policies aimed at weakening the yen, asserting that it provides Japan with an unfair advantage in trade.