Japan stocks unlikely to rise soon as tariff risks persist, Citi says

Published 06/03/2025, 04:36
© Reuters.

Investing.com-- Japanese stocks are likely to remain under pressure in the near term due to concerns over U.S. tariffs, a potential economic slowdown, and the Bank of Japan’s policy stance, Citi analysts said in a research note.

The Nikkei 225, which had been trading in a range between 38,000 and just above 40,000 since October 2024, recently fell below 38,000, Citi noted.

Citi analysts attributed this decline to worries over the U.S. economy following weak economic data, uncertainty about President Donald Trump’s tariff policies, a stronger yen, and a correction in high-tech stocks correlated with the U.S. market.

Trump has proposed tariffs on key industries, including autos, semiconductors, and pharmaceuticals, alongside an investigation into reciprocal tariffs that could lead to further trade barriers, Citi analysts said in a note.

Analysts expect it will take time for the full scope of the administration’s trade policy to become clear, with a key report on reciprocal tariffs due in August.

Despite these risks, Citi noted that Japanese stocks have already priced in much of the negative sentiment, with valuations lagging global peers.

While short-term corrections are possible due to tariff-related headlines, the downside may be limited, with the Nikkei 225 potentially finding support around 35,500 and the TOPIX near 2,550, Citi analysts added.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers
© 2007-2025 - Fusion Media Limited. All Rights Reserved.