Nikkei Tumbles 5% Amid Escalating U.S.-China Trade Tensions

Japan’s Nikkei share average plunged 5.1% in early trading Friday, hitting 32,855.56, as global market jitters over the intensifying U.S.-China trade war rattled investors. The broader Topix index also dropped sharply, down 4.7% to 2,419.32.

The sell-off followed Wall Street’s steep losses overnight, where all three major U.S. stock indexes reversed previous gains. Investors’ fears deepened amid escalating tensions between Washington and Beijing, overshadowing positive U.S. economic data and ongoing trade discussions with Europe.

Thursday’s sharp 9% rebound in the Nikkei—triggered by U.S. President Donald Trump’s announcement of a 90-day tariff freeze for several countries—proved short-lived. On Friday, investor sentiment turned risk-averse once more, with tech and retail stocks leading declines.

Fast Retailing, the operator of Uniqlo, fell 3.87%, while chip equipment makers Tokyo Electron and Advantest sank 5% and 7.5%, respectively. The sell-off was broad-based, with all 33 industry sub-indexes on the Tokyo Stock Exchange posting losses. Refining companies were hit hardest, tumbling 6.6% to mark the worst-performing sector.

Traders and analysts cite uncertainty surrounding trade negotiations and the broader implications for global economic growth as key drivers of market volatility. With no clear resolution in sight, investors are bracing for further turbulence across equity markets.

The renewed slump highlights the fragility of recent rallies and underscores how sensitive markets remain to geopolitical developments. As tensions persist, market watchers are closely monitoring statements from both Washington and Beijing for signs of progress or further escalation.