(Bloomberg) — Japanese stocks posted slight gains Tuesday, finding stability after their wild swings following U.S. President Donald Trump’s statements that he would impose tariffs on goods from Canada and Mexico next month .
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Although Trump’s pledge disappointed those who had bet there would be no immediate tariffs following a Wall Street Journal report, it was nonetheless better than investors’ worst fears of a universal levy that would have directly threatened Japan’s $150 billion exports to the United States.
The Topix index rose 0.1% to 2,713.50 after erasing a decline of as much as 0.6% at one point. The Nikkei advanced 0.3% to 39,027.98.
Trump has said he plans to impose 25% tariffs on Canada and Mexico, but some analysts have also said the potential impact is partly priced into market prices.
“The market was partly prepared. The lesson of Trump 1.0. was that you had to sell based on price rumors and buy based on facts,” said Toshiya Matsunami, chief analyst at Nissay Asset Management.
Even stocks of automakers, considered most vulnerable to tariffs due to large exports to the United States from factories in Japan and Mexico, managed to erase their early losses to end with slight losses. gains. Toyota Motor finished up 0.2%.
The stock prices of some automakers that export from Mexico to the United States will suffer temporary damage, said Yugo Tsuboi, chief strategist at Daiwa Securities. Unless there are universal tariffs, this will not lead to a significant deterioration in sentiment for Japanese stocks as a whole, he adds.
Despite market fluctuations, investors remain confident in the Bank of Japan’s decision to carry out a highly anticipated rate hike on Friday.
Money market instruments incorporate a greater than 90% probability of a rate increase to 0.50%. Bank stocks weakened, however, as investors took profits on recent gains ahead of the BoJ policy meeting.
Chip stocks were a bright spot, with the MSCI Japan Semiconductor Index up almost 2%, with some market participants reassured by Trump’s silence on the issue of cutting chip exports towards China.
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