Yen Appreciation, Defense, and Energy in Focus Ahead of Japan-US Summit – Market Watches Trump’s Statements
■ Key Market Themes
✅ The Japan-US summit will impact the yen and stock markets.
✅ Will Japan be included in Trump’s tariff targets?
✅ Potential US demands for increased Japanese defense spending and purchases of US-made equipment.
✅ Focus on the energy sector, including shale gas and LNG-related stocks.
✅ Concerns over potential impact on Toyota, SUBARU, and other Japanese automakers.
✅ Nippon Steel’s acquisition of US Steel could be on the agenda.
■ Yen Market – Potential for Further Appreciation Depending on Trump’s Statements
📌 Current Situation
- USD/JPY is trading around 151, significantly weaker than the 109 average during Trump’s first term.
- With growing expectations of a BOJ rate hike, any statements from Trump could further accelerate yen appreciation.
- BlackRock suggests the yen could strengthen to the 148 range depending on Trump’s remarks.
📌 Key Focus Areas
- Will Trump criticize Japan’s weak yen and push for yen appreciation?
- Will the growing expectations of a BOJ rate hike lead to more yen buying?
- Market remains cautious about Trump’s trade policy and forex-related remarks on Japan.
■ Defense & AI – Japan’s Defense Spending and US Equipment Purchases
📌 Background
- Trump is calling for NATO countries to contribute 5% of GDP to defense spending.
- Japan may face similar pressure to increase defense spending and purchase US-made defense equipment.
- Mitsubishi Heavy Industries, Kawasaki Heavy Industries, and IHI may benefit as key defense-related stocks.
📌 AI & Energy
- Trump has expressed strong interest in AI and announced a $100 billion AI infrastructure plan led by SoftBank, OpenAI, and Oracle.
- Hitachi could benefit from AI and energy-related initiatives.
■ Energy – Japan to Negotiate Increased Shale Gas & LNG Imports
📌 Background
- Prime Minister Ishiba is expected to discuss energy supply stability with the US.
- The expansion of US shale gas imports could be on the agenda.
- Power companies and LNG-related stocks (Mitsui O.S.K. Lines, Nippon Yusen, Kawasaki Kisen) are in focus.
■ Automobiles – Potential Tariff Risks for Toyota & SUBARU
📌 Background
- Trump has repeatedly criticized Japan’s trade surplus and may impose tariffs on the auto industry.
- Toyota and SUBARU rely heavily on the US market and could face significant impact.
- After Trump’s tariff announcement in early February, Toyota shares temporarily dropped 5% before rebounding when the implementation was delayed.
- If Trump signals renewed tariff hikes, Japanese auto stocks may drop again.
■ Nippon Steel & US Steel – Market Watches Trump’s Stance
📌 Background
- Under Biden, Japan’s acquisition of US Steel was blocked, making it a key issue in US-Japan talks.
- Trump met with US Steel’s CEO, raising speculation that he might comment on the deal.
- If Trump supports the acquisition, it could positively impact Nippon Steel’s stock.
■ Trading Strategy
✅ Prepare for Yen Appreciation Risk – Look for USD/JPY and EUR/JPY Short Opportunities
- USD/JPY: Sell at 152.50-153.00, target 148.00-149.00
- EUR/JPY: Sell at 160.50-161.00, target 158.00-157.50
✅ Focus on Rising Defense & Energy-Related Stocks
- Defense: Mitsubishi Heavy, Kawasaki Heavy, IHI
- AI & Energy: Hitachi
- LNG Shipping: Mitsui O.S.K. Lines, Nippon Yusen, Kawasaki Kisen
✅ Watch Out for Potential Auto Stock Decline
- If Trump revives tariff concerns, Toyota and SUBARU shares may drop.
■ Summary
✅ The Japan-US summit will focus on defense, energy, and trade.
✅ If Trump criticizes Japan’s trade surplus, the yen may appreciate further.
✅ Keep an eye on defense and LNG-related stocks.
✅ If Trump hints at more tariffs, auto stocks may fall.
✅ US non-farm payroll data could also be a key market driver.
