From Yahoo Finance: 2025-04-04 01:53:00

Japanese banks experienced their largest weekly drop in at least 40 years due to U.S. tariffs, causing a 20% decline in banking stocks. This reflects fears of a global slowdown impacting Japan’s economic recovery and interest rates normalization. Analysts are concerned that the trade war may halt Japan’s growth trajectory.

The decline in Japanese bank stocks is attributed to fears of a global recession and reduced loan demand due to squeezed corporate activity from U.S. tariffs. Share prices of major financial firms, including Mitsubishi UFJ Financial Group, Sumitomo Mitsui Financial Group, and Mizuho Financial Group, dropped significantly. Investors are cautious about the impact of tariffs on the economy.

The Bank of Japan is expected to cut economic growth forecasts and delay raising interest rates due to the potential negative impact of higher duties. Despite inflation exceeding the 2% target, there are uncertainties about the BOJ’s ability to maintain rates amidst mounting inflationary pressure. Analysts predict a slowdown in economic growth due to the tariffs.

The sudden drop in Japanese bank stocks highlights concerns about the rapid acceleration of share prices in recent years, fueled by optimism about economic normalization. The recent sell-off reflects worries about reduced transaction activity and profitability for banks. Investors are reevaluating their positions in response to the changing economic landscape.

Read more: Japanese bank shares hammered as US tariffs spur fears about country’s fragile recovery