The Nikkei fell 1.24% to 38,678.04, its lowest close since Feb. 3, while the broader Topix lost 1.18% at 2,734.6.
“The yen’s strength against the dollar and uncertainties about the U.S. tariff policy pushed Japanese equities lower,” said Naoki Fujiwara, senior fund manager at Shinkin Asset Management.
The yen hit its strongest level in over two months on Thursday on bets on further rate hikes from the Bank of Japan (BOJ), while concerns about new tariff threats from the U.S. kept markets on edge.
A stronger Japanese currency tends to hurt exporters, as it decreases the value of overseas profits in yen terms when firms repatriate them to Japan.
Automakers lost ground, with Toyota Motor falling 1.63% to drag the Topix the most. Honda Motor and Nissan Motor slipped 1.37% and 2.83%, respectively. Uncertainties about Trump’s tariff plans also weighed on automakers. Trump said on Wednesday he would announce tariffs related to lumber, cars, semiconductors and pharmaceuticals “over the next month or sooner.” Japanese banks also fell, snapping a rally driven by expectations for a BOJ policy shift. Mitsubishi UFJ Financial Group slipped 1.94% and Mizuho Financial Group lost 1.93%.
Shiseido gave up early gains to end 0.07% lower, after a 13% surge in the previous session fuelled by news that investment group Independent Franchise Partners is a shareholder of the cosmetics maker.
Of more than 1,600 stocks trading on the Tokyo Stock Exchange’s prime market, 15% rose and 81% fell, with 2% ending flat.
