Japanese stocks plummeted, leading the Nikkei index to potentially record its worst quarter since March 2020 amid worries over the global trade conflict. The Nikkei 225 Stock Average saw a significant decline of up to 4.2%, the most since September, driven by chip-related companies such as Renesas Electronics Corp. and Disco Corp, which fell over 7%. The broader Topix index also fell by 3.9%, with financial and electronic appliance firms facing the most pressure. Additionally, the appreciation of the yen further weighed down on exporters' stocks.

Investors are on edge ahead of the impending tariffs on April 2, particularly the US reciprocal levies, which has led to apprehension in the market. The decreasing US stock futures on Monday have contributed to the weakness in Japanese equities. The Nikkei gauge has slumped over 10% since the end of December, while the Topix index has also seen a drop of more than 4%.

This trend reveals a cautious approach driven by concerns about economic activity being hindered by uncertainties surrounding the policies of the Trump administration, especially regarding tariffs. Tetsuo Seshimo, a portfolio manager at Saison Asset Management Co., highlighted that in times of risk aversion, the yen tends to strengthen, impacting Japanese stocks.