Foreign Investors Pull Back as U.S. Tariff Hikes Loom

Investors sold Japanese stocks for the eighth week due to anticipated U.S. tariffs. Foreign outflows contrasted with a rise in the Nikkei index. Investors also divested from Japanese bonds, while Japanese investors increased foreign stock purchases. U.S. tariffs threaten to impact Japan's auto sector.

In a surprising turn, Japanese stocks faced significant foreign investor outflows as caution spread ahead of U.S. tariff hikes poised for the coming week, threatening to disrupt Asian supply chains and Japan's auto sector. The Ministry of Finance reported foreign disposals totaling $8.06 billion last week.

Fueling market anxiety, President Donald Trump confirmed a 25% import tariff on cars and light trucks, raising concerns about potential price surges and production halts. Despite these challenges, the Nikkei index noted a 1.68% gain, but remains below the key 200-day moving average.

Further highlighting the trend, net foreign sales of Japanese bonds reached the highest since December, while Japanese investors turned to foreign stocks, tallying a fifth net purchase in six weeks.

(With inputs from agencies.)