Amid escalating global trade tensions, the Japanese stock market experienced a significant downturn in the latest round of trading. On the last trading day of March, the Nikkei 225 index fell by as much as 4.2%, marking the largest single-day drop since September last year. There is widespread concern that this quarter might be the worst-performing one since March 2020.
In this dramatic drop, export-oriented companies were hit hardest, with semiconductor-related stocks notably affected. Shares of semiconductor companies like Renesas Electronics Corp. and Disco Corp. both fell by more than 7%. Meanwhile, the Topix index decreased by 3.9%, with financial and electrical appliance stocks being the main drags on the market.
In addition to global trade issues, the Japanese domestic market is also facing currency pressure. The strengthening yen is further dampening the performance of export stocks. Jumpei Tanaka, Investment Strategy Director at Pictet Asset Management Japan Ltd., noted that market sentiment is particularly tense ahead of the reciprocal tariffs the United States will implement on April 2. The continuous decline of U.S. stock futures on Monday has also exacerbated pessimism in the Japanese market.
Overall, since the end of December 2023, the Nikkei index has cumulatively fallen by more than 10%, and the Topix index has also dropped by over 4%. Investors are broadly employing risk-averse strategies, primarily driven by concerns about the uncertainty in the Trump administration's policy direction.
Tetsuo Seshimo, Portfolio Manager at Saison Asset Management Co., pointed out that the current uncertainty is prompting investors to withdraw from risk assets. In the Japanese market, the yen typically appreciates when external risks rise. This "safe-haven attribute" further pressures export companies, exacerbating market volatility.
These various factors combined are placing significant downward pressure on the Japanese stock market, and market sentiment has clearly turned colder. Investors are closely monitoring the policy directions of major global economies, waiting for new market signals.
