TOKYO: Japanese shares ended lower on Wednesday, dragged by a decline in automakers after U.S. President Donald Trump’s auto tariff threat.

The Nikkei share average ended 0.27% lower at 39,164.61. The broader Topix mirrored the drop to end at 2,767.25.

“The Nikkei opened lower as remarks about tariffs on cars weighed on sentiment,” said Shuutarou Yasuda, a market analyst at Tokai Tokyo Intelligence Laboratory.

Trump said on Tuesday he intended to impose auto tariffs “in the neighbourhood of 25%” and similar duties on semiconductors and pharmaceutical imports, the latest in a series of measures threatening to upend international trade.

Toyota Motor dropped 1.73% and was the biggest drag on the Topix.

Honda and Nissan shed 2.26% and 1.87%, respectively. The auto index slipped 1.3%.

Meanwhile, Bank of Japan board member Hajime Takata said the central bank must raise interest rates more as keeping them at current low levels could cause excessive risk-taking and push up inflation too much.

“The BOJ is positive about raising rates at a time when other countries are cutting rates. That is not positive for Japanese stocks,” Yasuda said.

The Nikkei dipped slightly below the 39,000 level soon after Yasuda began his speech, but recovered promptly.

Bank shares rose amid expectations for higher rates, with Sumitomo Mitsui Financial Group gaining 2.05%. Mizuho Financial Group gained 0.59%.

Mitsubishi UFJ Financial Group hit a record high early in the day but ended the session down 0.52%.

Chip-related stocks Tokyo Electron and Advantest rose 3.52% and 1.02%, respectively, to track the benchmark S&P 500, which squeaked past its previous record closing high.

Of more than 1,600 stocks trading on the Tokyo Stock Exchange’s prime market, 36% rose and 60% fell, with 3% ending flat. 

Reuters