Japan's Nikkei inches down as election, tariff worries overshadow gains of chip-related shares
The Nikkei inched 0.09 per cent lower at 39,642.4 by the midday break, after swaying between small gains and losses.
The broader Topix fell 0.29 per cent to 2,817.05.
"Investors have excuses for not buying or selling stocks," said Shigetoshi Kamada, general manager at the research department at Tachibana Securities.
"They are cautiously awaiting the outcome of the upper house election, while the outlook of the trade talks between is not clear even as the deadline approaches."
A defeat of the ruling Liberal Democratic Party and its coalition partner Komeito in the election on July 20 could empower opposition parties that have pledged to cut or abolish the sales tax.
Such worries sent Japanese government bond yields to historic high levels, driving worries about higher borrowing costs.
Chip-related heavyweights Tokyo Electron and Advantest rose 2.94 per cent and 0.9 per cent, respectively, to track Nvidia's 4 per cent gain overnight.
Shares of Nvidia jumped after the AI chip leader unveiled plans to resume sales of its H20 AI chip to China, pushing the Nasdaq Composite to end at another record.
Toho jumped 10.06 per cent after the creator of the "Godzilla" movie franchise raised its annual net profit forecast.
Uniqlo-brand owner Fast Retailing slipped 1.2 per cent to weigh on the Nikkei the most.
Toyota Motor lost 0.93 per cent even as the yen fell to a more than three-month low against the dollar.
"Investors could not buy Toyota despite the yen's weakness because they are concerned about the tariff negotiations," said Kamada.
Local media reported Prime Minister Shigeru Ishiba is arranging to meet with US Treasury Secretary Scott Bessent in Tokyo on Friday ahead of an August 1 deadline to strike a trade deal with the United States, else face punishing tariff of 25 per cent.
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