Japan's Nikkei index falls 0.2% to 39,602.58 at morning close

Japan's Nikkei index falls 0.2% to 39,602.58 at morning close

The Nikkei 225 index experienced a 0.2% decline, closing at 39,602.58 on July 2, 2025, according to the latest trading data. This downturn follows a third consecutive day of decline, driven by investor apprehension surrounding upcoming domestic elections and ongoing trade discussions with the United States [1].

Investor sentiment was negatively impacted by the potential loss of the ruling coalition's majority in the upcoming upper house election on July 20. This could potentially delay trade negotiations and increase concerns about fiscal expansion [1]. The Nikkei 225 index closed 0.3% lower, while the broader Topix gauge ended flat [1].

Trade negotiations between Japan and the U.S. have been complicated by U.S. President Donald Trump's recent tariff hikes on Japanese imports to 25% starting August 1. However, Japan has not indicated any intention to respond with reciprocal measures [3]. The trade negotiations appear to have stalled, with a Japanese official warning about potential economic fallout if the tariffs are implemented [3].

Despite these challenges, Japan and South Korea are seen as relatively favored nations compared to other countries facing similar tariff threats. For instance, Brazil is currently facing a 50% tariff from the U.S. [3]. This relatively better position has somewhat mitigated the immediate impact on the Japanese stock market.

The Japanese yen hovered around 147.6 per dollar on Tuesday, near its lowest level in two months, reflecting the persistent trade-related tensions [3]. Investors are now focused on upcoming trade and inflation data from Japan, which may provide further insights into the domestic impact of U.S. tariff threats.

In the stock market, online retailer Mercari and videogame maker Nexon were among the largest losers, dropping 5.4% and 4.2%, respectively. Major manufacturers such as Mitsubishi Heavy Industries and IHI surged, with gains of over 3.6% [4].

The Nikkei 225 index closed down by 0.48%, and the Tokyo Stock Exchange index fell by 0.27%. Among the stocks with high transaction volume, Lasertec semiconductors dropped over 5%, Disco fell over 4%, and SoftBank Group, Tokyo Electron, and 7& I Holdings fell over 3%; Mercari software rose over 6%, and Mitsubishi Heavy Industries increased over 4% [4].

References:
[1] https://economictimes.indiatimes.com/markets/stocks/news/japans-nikkei-falls-for-3rd-day-as-trade-impasse-election-weigh-on-sentiment/articleshow/122432512.cms
[2] https://finance.yahoo.com/quote/%5EN225/
[3] https://www.tradingview.com/news/te_news:470141:0-japanese-yen-hovers-near-2-month-low/
[4] https://www.moomoo.com/news/post/44140395/record-tr4cking-news-default