Nikkei 225 Enters Correction as US Tariff Worries Hit Exporters

Japan’s blue-chip Nikkei 225 Stock Average slumped to enter a technical correction as exporter- and chip-related stocks slid on concerns about the global trade war, Bloomberg reported.

The Nikkei 225 index fell 4.1% on Monday, taking its drop from a December high to 12%. The tech-heavy gauge fell 11% for the quarter, its worst performance since March 2020. The broader Topix index retreated 3.6%, with financial and electronic appliance companies the biggest drags. A stronger yen added to pressure on exporters’ shares. The yen increased 0.5% to 149.07 and outperformed its Group-of-10 currencies against the dollar.

Shares were sold off across the region, as traders trimmed exposure to riskier assets ahead of the April 2 deadline for US President Donald Trump’s reciprocal tariffs. Sentiment also took a hit after data released Friday showed that consumer spending in the world’s biggest economy trailed economists’ estimates last month.

“That weakening of the US economy is going to keep weighing on stocks in countries like Japan that are big exporters to the US,” said Phillip Wool, head of portfolio management at Rayliant Global Advisors Ltd. “Some investors had still been assuming America’s closest allies would be spared from a trade fight, or that Trump wouldn’t ultimately go through with these threats.”

Seven of 10 of the biggest decliners on the Nikkei index were chip-related stocks, with Renesas Electronics Corp. and Socionext Inc. tumbling at least 8% each.

“This is a risk-averse move based on concerns that economic activity will be suppressed due to the lack of clarity over the landing point of the Trump administration’s policies, including tariffs,” said Tetsuo Seshimo, a portfolio manager at Saison Asset Management Co. “In the case of Japan, when there is a risk-off, the yen appreciates at the same time, so that also has an impact.”a