Japanese stocks edged lower on Monday, with the Nikkei 225 down 0.1% to 50,324 and the broader Topix index down 0.37%. The main pressure came from tourism and retail stocks after geopolitical tensions with China escalated. Beijing warned Japan not to interfere in the Taiwan issue and also urged its citizens to exercise caution when traveling to Japan. A Japanese diplomat is reportedly planning a visit to China to try to calm the situation, but the market remains nervous.

Travel-related stocks were the first to suffer from this sentiment. Japan Airlines and ANA Holdings fell 3.8% and 3.1%, respectively, reflecting concerns that Chinese tourists could reduce visits to Japan. Pressure also extended to consumer stocks such as Fast Retailing, Isetan Mitsukoshi, Oriental Land, Ryohin Keikaku, and Sony Group, which fell between 3.2% and 11.3%. Investors are concerned that tourism spending and household consumption could slow if political tensions persist.

On the other hand, Japan's domestic economic data provided mixed signals. The Japanese economy contracted 0.4% quarter-on-quarter in the third quarter, reversing from the 0.6% expansion in the previous quarter. However, this figure was still better than market expectations of a 0.6% decline. This means the Japanese economy is indeed slowing, but not as badly as feared. The market is now curious: will tensions with China further depress sentiment, or could the visit of Japanese diplomats to Beijing be a turning point for tourism-sensitive and retail stocks? (asd)

Source: Newsmaker.id