Nikkei 225 drops
Japan’s Nikkei 225 was the worst performer in Asia today. Marking its third straight fall, the index lost 1.63% to 20,601.19, a three-month low. The index lost 7.4% in May. The tariffs on Mexican imports and Japan’s own economic data led to the drop. Just like Japan, Mexico is a key exporter of automobiles to the US. Many Japanese companies assemble their cars in Mexico before exporting them to the US. Thus, tariffs on Mexico are also expected to hurt Japanese carmakers.
Economic data largely disappoints
While Japan’s unemployment remained low at 2.4% in April, retail sales grew by only 0.5% during the month against the expected 1%. Consumer inflation in Tokyo came in at 1.1% in May against an expected 1.2%. With a low unemployment rate, slowing retail sales growth, negative interest rates, and undershooting inflation, the Japanese central bank doesn’t have much flexibility to tackle any slowdown. On May 29, Japan’s central bank chief, Haruhiko Kuroda, expressed a cautious outlook over the state of the global economy.
The household confidence index dropped in May to 39.4 from April’s 40.4. Construction orders saw a 19.9% decline while housing starts dropped 5.7%.