Japan's Nikkei falls as US credit downgrade spurs asset jitters, lifts yen

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19/05/2025 01:43

TOKYO, May 19 (Reuters) - Japan's Nikkei share average dropped on Monday after Moody's downgrade of the U.S. government credit rating raised concerns about a potential flight from U.S. assets, leading to a stronger yen.

As of 0029, the Nikkei index was down 0.6% at 37,521.86, while the broader Topix .TOPX slipped 0.3% to 2,732.22.

"The market is cautious about the impact of the Moody's downgrade of the United States. They are worried this could drive sell-off of U.S. assets," said Shuutarou Yasuda, a market analyst at Tokai Tokyo Intelligence Laboratory.

"The timing of the downgrade was bad. It came at a time domestic stock markets recouped losses from (U.S. President Donald) Trump's tariff announcement," he said.

Moody's downgraded the U.S. sovereign credit rating on Friday due to concerns about the nation's growing, $36 trillion debt pile, in a move that could complicate Trump's efforts to cut taxes and send ripples through global markets.

"If U.S. dollars are sold, that would push the yen higher, which is bad for Japanese exporters," said Shoichi Arisawa, general manager of the investment research department at IwaiCosmo Securities.

Shares of Fast Retailing 9983.T, the parent company of Uniqlo, slipped nearly 1% - the biggest drag in the Nikkei index.

Chip-related Advantest 6857.T and Tokyo Electron 8035.T lost 1.35% and 0.87%, respectively.

 (Reporting by Junko Fujita; Editing by Sherry Jacob-Phillips)

 ((junko.fujita@thomsonreuters.com;))