Japan's Nikkei ends lower ahead of Trump inauguration; firmer yen hurts exporters

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Japan's Nikkei share average slipped on Friday amid caution ahead of market reaction to President-elect Donald Trump's inaugural speech next week, while a stronger yen hurt exporters' shares.

The Nikkei fell 0.31% to close at 38,451.46 after dropping as much as 1.3% earlier in the session. For the week, the index has shed 1.58%.


"What's behind the market decline is a concern about a reaction to the comments from Trump who is due to be inaugurated on Monday. Investors do not want to take risks for a possible big swing in the market," said Hiroyuki Ueno, chief strategist at Sumitomo Mitsui Trust Asset Management.

Japanese equities fell as the yen strengthened on expectations that the Bank of Japan (BOJ) will raise its policy rate next week.


"The interest rate hike next week seems to be almost certain but the BOJ's future rate path is not clear yet. It is natural for investors to cut their positions under these circumstances," said Ueno.

The yen climbed 1.5% against the U.S. dollar this week, the strongest weekly run since late November 2024. A stronger yen tends to hurt exporters' shares as it diminishes the value of overseas profits in yen terms when firms repatriate them to Japan. The broader Topix fell 0.33% to 2,679.42, dragged lower by Toyota Motor's 1.73% decline.

Nintendo fell 4.26% after the gaming company on Thursday said it would release the Switch 2 console this year.

Banks slid, with Mitsubishi UFJ Financial Group and Sumitomo Mitsui Financial Group losing 1.19% and 0.76%, respectively.

Technology start-up investor SoftBank dipped 1.33% to drag the Nikkei the most. Uniqlo clothing store operator Fast Retailing slipped 0.37%.

Robot maker Fanuc rose 1.33% to lend the biggest boost to the Nikkei.

Of the more than 1,600 stocks trading on the Tokyo Stock Exchange's prime market, 41% rose, 54% fell and 3% traded flat.

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