Japan’s Nikkei opened the week on a weak note after an extended holiday, as renewed uncertainty over the country’s leadership and ongoing U.S.-China trade frictions weighed on sentiment. A stronger yen and the previous Wall Street selloff further pressured risk appetite, with investors cautious ahead of political developments in Tokyo. The initial optimism that followed Sanae Takaichi’s election as LDP leader faded after coalition partner Komeito withdrew support, raising questions over Japan’s next prime minister and the stability of upcoming policies.

Broader concerns around global trade and market volatility also limited investor confidence, keeping Japanese equities on the defensive. Market participants are closely watching for clarity on domestic political direction and any signals from Washington and Beijing that could ease trade tensions. Despite the short-term pressure, expectations for technological and AI-driven growth continue to provide some medium-term optimism for Japan’s market outlook.