Japan Stocks Continue Downtrend as Trump Tariffs Shake Global Markets, Nikkei Drops Over 3%

Japan’s stock market experienced significant declines on Friday, mirroring steep losses on Wall Street after the latest tariffs imposed by US President Donald Trump sparked widespread concerns about a potential global trade war.

The Japanese market led the region’s downturn, with the Nikkei 225 falling 2.75% to close at 33,780.58. This marked a 20% drop from its peak last July. Meanwhile, Japan’s broader Topix index declined even more sharply, by 3.37%, to finish at 2,482.06. This broad-based sell-off followed steep losses in US equities, which saw the S&P 500 enter correction territory and the Dow Jones Industrial Average plummet by over 1,600 points.

In the wider Asia-Pacific region, other markets faced similar challenges. Australia’s S&P/ASX 200 fell by 2.44%, sliding into correction territory after a 11% drop from its February high. South Korea’s Kospi index dropped 0.86%, while the smaller Kosdaq index managed to rise 0.57%. The region’s markets were also affected by news from South Korea’s Constitutional Court, which upheld the impeachment of President Yoon Suk Yeol, leading to political uncertainty in the country.

Trump’s announcement on Wednesday of reciprocal tariffs, which will affect over 180 countries, has rattled investors globally. The tariffs are expected to escalate tensions and may lead to a wider trade conflict, raising the possibility of a global recession. The immediate effects were seen in the sharp decline of US stock futures, which fell 0.3%, and futures for major stock indices like the S&P 500 and Nasdaq 100 also faced significant losses.

The global economic ripple effect continued to be felt in commodity markets as well. Oil prices dropped further, with US crude slipping by $2.70 to $64.25 per barrel and Brent crude losing $2.63 to $67.51. Additionally, investors flocked to safe-haven assets, sending the US dollar lower against the yen and boosting gold prices.

The economic uncertainty stemming from Trump’s tariff actions is not only a concern for global markets but is also having a notable impact on specific sectors. In Japan, the automotive sector was hit hard, with major players like Toyota and Honda seeing declines of over 4% and 5%, respectively, due to their exposure to global trade tensions.

Meanwhile, bond markets saw a surge in demand for safety, with US Treasury yields falling below 4%, marking their biggest drop in several months. This reflects growing fears that the US economy could face stagflation, a situation of slower growth combined with higher inflation, as the trade war intensifies.

Reuters, CNBC, and the Associated Press contributed to this report.