Japanese investors are closely monitoring the developments as Prime Minister Shigeru Ishiba heads to the United States for his inaugural meeting with President Donald Trump. This diplomatic engagement has elevated the focus on energy, defense, and artificial intelligence (AI) stocks within the Japanese market.
Prior to the meeting, a pronounced sense of both risk and opportunity has emerged in Japanese markets. Investors anticipate that defense, energy, and AI-related sectors might benefit, while the automotive industry could be at risk, especially if tariffs become a topic of discussion.
The yen, having gained value earlier in the week, remains volatile. Its movement largely hinges on the outcomes of this diplomatic meeting and any trade-related remarks made by President Trump. Despite being spared in previous tariff rounds, Japan’s trade surplus with the US remains a contentious issue, and Ishiba faces this challenge with limited diplomatic experience compared to his predecessor, Shinzo Abe.
There is speculation that Japan might increase its military spending, which could benefit defense companies such as Mitsubishi Heavy Industries Ltd. and Kawasaki Heavy Industries Ltd. In the realm of AI, Trump’s interest, highlighted by the Stargate venture involving ChatGPT, SoftBank, and Oracle, suggests potential growth opportunities.
On the energy front, Ishiba intends to seek stable energy supplies, potentially through increased shale gas imports, which could positively impact Japanese energy stocks. Shippers involved in liquefied natural gas (LNG) transport might also see gains if these talks turn favorable.
Automakers supplying the US market are on high alert, given previous tariff threats affecting companies like Toyota Motor Corp. This sector’s reaction will depend on the tone and outcomes of trade discussions between Ishiba and Trump.
Additionally, the potential acquisition of United States Steel Corp. by Nippon Steel is being closely watched, as it could influence market dynamics based on the meeting’s discussions.
As Prime Minister Ishiba navigates his crucial meeting with President Trump, the implications for Japanese markets are significant. The focus remains on how defense, energy, and AI stocks will react, contingent upon the diplomatic discourse and resultant trade policies.
