Japanese Stocks End Lower Amid Election and Tariff Worries

Japanese stocks closed marginally lower despite improving July business sentiment. The Nikkei inched down as election and tariff worries overshadowed gains of chip-related shares. The FTSE 100 topped 9,000 and European peers recovered.

Japanese stocks closed marginally lower on Wednesday, July 16, 2025, despite an improvement in July business sentiment as measured by the Reuters Tankan Index. The Nikkei .N225 inched down 0.09% to 39,642.4, while the broader Topix .TOPX fell 0.29% to 2,817.05 [2].

The Reuters Tankan Index, a monthly snapshot of Japanese business sentiment, showed a rise in the Japan Manufacturers Index to +7 in July, up from +6 in June, indicating a modest improvement in confidence among manufacturers. The Japan Non-Manufacturers Index remained steady at +30 for the third consecutive month [1]. Looking ahead, manufacturers expect sentiment to rise to +8 by October, though service firms see a modest dip to +27.

However, concerns over elections to the upper house and the fate of trade negotiations with the United States overshadowed the positive sentiment. 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, sending Japanese government bond yields to historic high levels [2].

Chip-related heavyweights Tokyo Electron 8035.T and Advantest 6857.T rose 2.94% and 0.9%, respectively, tracking Nvidia’s NVDA.O 4% 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 .IXIC to end at another record. However, shares of Uniqlo-brand owner Fast Retailing 9983.T slipped 1.2% to weigh on the Nikkei the most, while Toyota Motor 7203.T lost 0.93% despite the yen's weakness against the dollar [2].

Meanwhile, the FTSE 100 topped 9,000 and reached a new record high, rising 10% in 2025 helped by investor flight from US stocks amid Donald Trump’s trade policies. The FTSE 100 share index hit 9,016.98 points in early trading on Tuesday, taking its gains during 2025 to more than 10% [4].

In contrast, Brazil’s real slipped 2% against the U.S. dollar in spot trading on Thursday, weakening past 5.60 per greenback after U.S. President Donald Trump announced a 50% tariff on all imports from Latin America’s largest economy [3].

References:
[1] https://www.tradingview.com/news/forexlive:65d23c76e094b:0-japan-manufacturers-sentiment-improved-in-july-despite-tariff-worries-reuters-tankan/
[2] https://japannews.yomiuri.co.jp/news-services/reuters/20250716-269829/
[3] https://kdal610.com/2025/07/10/brazils-real-weakens-2-after-trump-tariff-announcement/
[4] https://www.theguardian.com/business/2025/jul/15/ftse-100-breaks-through-the-9000-point-barrier-to-reach-new-record-high