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The Nikkei Stock Average plummeted sharply on the Tokyo Stock Exchange today, closing at 36,203.22 yen, down 378.54 yen or 1.03% from the previous week’s close. The decline reflected heightened investor anxiety over the yen’s appreciation, driven by expectations of a significant US interest rate cut.
The yen’s strength intensified as the US Federal Reserve is anticipated to announce a 0.5% rate cut at the ongoing Federal Open Market Committee (FOMC) meeting. This expected reduction would narrow the interest rate differential between Japan and the US, pushing the yen to a high of 139 per dollar—its strongest level in over a year. Although the yen has recently settled in the high 140s per dollar, the threat of further appreciation remains, prompting heavy selling of export-driven stocks like Toyota. The impact of a stronger yen is feared to erode profitability for exporters, exacerbating market volatility.
Additionally, financial stocks, including banks and insurance companies, experienced declines due to concerns over diminishing profits from lower US interest rates. Semiconductor-related stocks also faced pressure, with reports from securities firms citing uncertainties in the memory market as a key factor. The sector’s troubles were compounded by recent declines in US high-tech stocks, amplifying the sell-off in Tokyo.
Despite these challenges, the Nikkei showed some resilience towards the close, as bargain-hunters began to appear amid the yen’s fluctuations. Ichiro Asai of SBI Securities noted a cautious optimism, suggesting that investors are positioning themselves for potential opportunities following the FOMC decision.
The Tokyo Stock Price Index (TOPIX) fell by 15.38 points to 2555.76, a 0.60% drop, while the JPX Prime 150 Index closed at 1143.25, down 8.53 points or 0.74%. Total trading value on the Tokyo Stock Exchange Prime was 4.2028 trillion yen, with a trading volume of 1.87458 billion shares. Among the listed stocks, 631 fell, 960 rose, and 52 remained unchanged.