Asian shares mostly dip as the yen rises against the U.S. dollar

Asian markets retreated Monday as Japan’s benchmark tumbled following a sharp surge in the yen against the U.S. dollar, creating ripple effects across the region’s financial landscape.

The Nikkei 225 fell 1.9% to 52,812.45, with major exporters bearing the brunt of the selling pressure. Toyota Motor Corp. saw its shares slide 3.2% as investors reacted to the strengthening yen, which typically puts pressure on Japan’s export-oriented economy.

Currency markets witnessed significant movement as the dollar slipped to 154.26 Japanese yen from 155.01 yen. Just last week, the dollar had been trading around 158 yen before officials from both Japan and the United States signaled their readiness to intervene in support of the Japanese currency.

A weaker yen has historically benefited Japanese exporters by increasing the value of their overseas earnings when converted back to their home currency. The recent currency shift threatens to squeeze profit margins for Japan’s manufacturing giants who rely heavily on international sales.

Elsewhere in Asia, South Korea’s Kospi declined 0.6% to 4,961.58, while Hong Kong’s Hang Seng edged down 0.1% to 26,722.89. The Shanghai Composite bucked the trend, adding a modest 0.1% to reach 4,141.10. Markets in Australia, New Zealand, India, and Indonesia were closed for holidays.

U.S. futures trended lower amid ongoing uncertainty over American trade policies. S&P 500 and Dow Jones Industrial Average futures both fell 0.3%, indicating potential weakness when U.S. markets open.

Escalating trade tensions between the United States and Canada added to market anxieties. U.S. President Donald Trump recently threatened to impose a 100% tariff on Canadian goods if Canada proceeded with a free trade agreement with China. Canadian Prime Minister Mark Carney responded by clarifying that Canada had no such plans.

The trade dispute has evolved in recent months, with Canada initially aligning with U.S. policy by implementing a 100% tariff on electric vehicles from China and a 25% tariff on steel and aluminum. Beijing retaliated with similar measures, imposing 100% import taxes on Canadian canola oil and meal, plus 25% on pork and seafood.

However, Canada recently diverged from U.S. trade strategy during Carney’s visit to China, where he agreed to reduce the 100% tariff on Chinese electric cars in exchange for Beijing lowering tariffs on certain Canadian products. This policy shift has created additional uncertainty in North American trade relations.

Friday’s U.S. market performance showed mixed results. The S&P 500 edged up less than 0.1% to 6,915.61, though it still recorded a modest loss for the second consecutive week. The Dow Jones Industrial Average dipped 0.6% to 49,098.71, while the Nasdaq composite rose 0.3% to 23,501.24. Intel’s 17% plunge weighed heavily on overall market sentiment.

Investors are now turning their attention to Wednesday’s Federal Reserve meeting, though the market widely expects the central bank to hold interest rates steady.

In commodities, oil prices showed minimal movement, with benchmark U.S. crude rising 2 cents to $61.09 a barrel and Brent crude, the international standard, edging up 3 cents to $65.10 a barrel.

Meanwhile, precious metals continued their remarkable ascent, with gold gaining 2% to nearly $5,100 an ounce and silver jumping 6.4% to approximately $108 per ounce. This surge reflects investors’ growing preference for traditional safe-haven assets amid economic uncertainties and geopolitical tensions.

The continued strength in precious metals highlights investor concerns about inflation, currency stability, and broader economic health, even as equities markets have shown resilience in many regions throughout the year.