Image Credits : Reuters
Japan’s Nikkei share average closed marginally lower on Tuesday, extending its decline for the fifth consecutive session, as concerns over a strengthening yen overshadowed gains in the chip sector.
The Nikkei edged down 0.01% to finish at 39,594.39, falling short of breaching the psychological barrier of 40,000 despite a brief uptick of 0.8% earlier in the day.
A robust yen threatened to impact profitability for Japan’s export-oriented companies, coinciding with the onset of earnings season this week. The yen traded at 156.20 per dollar on Tuesday, moderating slightly from its previous close of 157.50 last week.
Market analyst Masayuki Kichikawa, chief Japan macro strategist at Mitsui Sumitomo DS Asset Management, acknowledged, “The market was somewhat overextended, prompting a necessary adjustment phase.”
Sector-wise, there has been notable rotation since mid-last week, with tech shares undergoing a correction while other sectors gain momentum, Kichikawa observed. Despite these shifts, he emphasized continuity in the upward trend.
The broader Topix index saw a modest increase of 0.21%, with value stocks outperforming growth stocks. Among the top performers, chip sector stocks led gains, following a positive trend from U.S. markets overnight.
Advantest, a prominent chip-testing equipment maker and Nvidia supplier, saw a 2.87% rise, while Tokyo Electron, a major chip-making machinery firm, gained 1.32%.
In sectoral performance on the Tokyo Stock Exchange, shipping led with a significant 6.62% surge, surpassing banking which recorded a 1.59% increase among the exchange’s 33 industry groups.
Nippon Yusen stood out as Nikkei’s top gainer, soaring 8.16% after revising its profit forecast. Similarly, Kawasaki Kisen Kaisha and Mitsui O.S.K. Lines saw robust gains of 6.44% and 5.27%, respectively.
The Nikkei, which reached a record high of 42,426.77 on July 11, retreated to a three-week low of 39,519.39 on Monday, underscoring ongoing market adjustments amidst fluctuating economic indicators and global currency dynamics.
Looking ahead, analysts anticipate continued sectoral adjustments while maintaining cautious optimism for the Nikkei, supported by underlying market fundamentals and corporate earnings expectations.