Tokyo stocks flat on post-election political uncertainty, US tariff

The Mainichi

4 days ago

TOKYO (Kyodo) -- Tokyo stocks ended flat Tuesday, with the Japanese ruling coalition's major setback in a national election weighing on the outlook for the stability of Prime Minister Shigeru Ishiba's government and tariff talks with the United States.
The 225-issue Nikkei Stock Average fell 44.19 points, or 0.11 percent, from Friday to 39,774.92. The broader Topix index finished 1.71 points, or 0.06 percent, higher at 2,836.19.
Japanese financial markets were closed Monday for a national holiday.
On the top-tier Prime Market, decliners were led by pharmaceuticals, precision instrument, and warehousing and harbor transportation service issues, while iron and steel, nonferrous and machinery sectors gained.
The U.S. dollar rose to the upper 147 yen level in Tokyo on selling of the yen due to political uncertainties in Japan after the ruling coalition failed to retain its majority in Sunday's House of Councillors election, dealers said.
Stocks were initially higher as investors were relieved after the election outcome was largely within expectations and Ishiba said Monday he will remain in office, averting a political upheaval at least for the time being, market analysts said.
But stocks later erased gains, as investors turned cautious with the election result leaving the ruling bloc without control of both chambers of parliament and concerns growing over prospects for the Japan-U.S. tariff negotiations.
"The election result itself drew buying as the ruling coalition won more seats than expected. But questions remain over the outlook for tariffs negotiations with the United States," said Seiichi Suzuki, chief equity market analyst at the Tokai Tokyo Research Institute.
Japan's chief negotiator Ryosei Akazawa is in Washington for the eighth round of ministerial-level talks as the deadline for imposition of U.S. President Donald Trump's so-called reciprocal tariffs looms on Aug. 1. If there is no deal by that date, Japan is set to face a country-specific tariff of 25 percent on its goods, which would be a further drag on its economy.
"With the deadline nearing and difficulties of reaching an agreement becoming apparent, investors are not in the mood to proactively buy stocks," Suzuki said.