From Financial Modeling Prep: 2025-02-04 02:00:37

Japanese stock markets experienced significant sell-offs due to concerns over increased trade tariffs by President Trump. Despite the drop, Citi analysts believe the downside may be limited, citing lower valuations and potential central bank interventions. The Nikkei 225 index fell 2.3% after Trump imposed tariffs on Canada, Mexico, and China, impacting automakers like Toyota. However, the market rebounded over 1% on Tuesday following a 30-day tariff postponement for Mexico and Canada. Citi analysts suggest that Japanese stocks, already trading at lower valuations, may have limited room for further weakness. They also see minimal chances of direct tariffs on Japan before the upcoming U.S.-Japan summit. In the face of a prolonged trade war, central banks like the Bank of Japan and the Federal Reserve could introduce more monetary easing policies to provide liquidity and potentially benefit both U.S. and Japanese markets. Despite short-term rebounds, uncertainties surrounding Trump’s trade policies continue to loom over Japan’s stock market outlook. With Chinese tariffs still looming, investors are closely monitoring global trade tensions for potential market stability and investment opportunities.



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