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Japanese shares dive as market frets over premiership, US-China tensions
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Japanese shares dive as market frets over premiership, US-China tensions
Oct 14, 2025 12:01 AM

(Updates closing prices)

By Kevin Buckland

TOKYO, Oct 14 (Reuters) - Japanese shares sank on

Tuesday after a long weekend, clocking their sharpest one-day

drop since April, as investors fretted over uncertainty

surrounding the country's next premier and persistent U.S.-China

trade tensions.

The Nikkei share average closed 2.58% lower at

46,847.32, while the broader Topix slid 2% to 3,133.99.

Japanese investors returning from a national holiday on

Monday faced a complex global backdrop, including a stronger yen

and a steep Wall Street sell-off on Friday.

While both saw partial reversals, market sentiment remained

fragile as U.S.-China trade tensions accelerated, with shifting

signals from U.S. President Donald Trump unsettling traders.

On balance, weaker U.S. stocks and a stronger yen since the

start of Japan's extended weekend weighed on the market, said

Maki Sawada, an equity strategist at Nomura Securities.

In addition, the initial euphoria from fiscal dove Sanae

Takaichi's election as leader of the Liberal Democratic Party at

the start of the month has faded after coalition partner Komeito

pulled support. This opened a small possibility of an opposition

party leader being elected prime minister by parliament later

this month. Local media say October 20 or October 21 are likely

dates for the vote.

The Nikkei struck a record high last week in the immediate

reaction to Takaichi's surprise victory but the shock exit of

Komeito has cast doubts over what happens next.

"The decline of the 'Takaichi trade' is one reason" for

weakness in Japanese stocks on Tuesday, Sawada said. "Political

uncertainty is weighing."

The Japanese yield curve also steepened on Tuesday, with

investors buying short-dated Japanese government bonds and

selling longer-dated securities as investors took stock of the

political flux.

Exporters, whose overseas revenue is crimped by a stronger

currency, dropped on Tuesday, with Toyota ( TM ) down 1.2%.

SoftBank Group slumped 6%, extending its pullback

from a record high on Thursday as the heavyweight startup

investor continued to retreat.

Elsewhere, Muji owner Ryohin Keikaku ( RYKKF ) surged more

than 13% following its earnings after the closing bell on

Friday, making it the Nikkei's top-performing stock.

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