Japan’s Nikkei Muted; Set to Post First Weekly Drop in Five as Tech Stocks Drag

Reuters

13:13 JST, December 1, 2023

TOKYO, Dec 1 (Reuters) – Japan’s Nikkei share average edged lower on Friday, keeping it on course to post its first weekly drop after four straight weeks of gains, as tech shares slumped amid a rise in bond yields.

The Nikkei .N225 ended the morning session down 0.08% at 33,461.71, setting it up for a 0.48% slide this week.

Tech was the only Nikkei sector to decline. Among the index’s 225 components, 81 fell compared to 139 risers, while five were flat.

The broader, less tech-centric Topix .TOPX rose 0.35%, but was still set for a 0.32% weekly decline. Topix value shares .TOPXV gained 0.62%, versus a 0.08% rise for growth shares .TOPXG.

Tech companies tend to be highly leveraged, making them sensitive to changes in interest rates. Japan’s long-term yields JP10YTN=JBTC added 3 basis points to 0.7% on Friday, tracking a rebound in U.S. Treasury yields overnight US10YT=RR, following three days of steep declines.

“For the last few days, yields have been falling, and that’s supported equities, but today yields are rebounding, and that’s a weight on stocks,” said Maki Sawada, a strategist at Nomura Securities.

“The Nikkei doesn’t look like it can retake 38,000 in the current environment,” she added. “Investors have been taking the opportunity to lock in profits.”

The Nikkei logged its best monthly gain in November in three years, touching a fresh 33-year peak on Nov. 20 at 33,853.46, although momentum dissipated thereafter.

Four of the Nikkei’s five biggest drags on Friday were technology shares.

Startup investor SoftBank Group 9984.T declined 1.78%, while chip-related shares Tokyo Electron 8035.T and Advantest 6857.T each fell 0.70%. TDK 6762.T slid 1.16%.

At the other end, automakers drew support from the yen’s ovenight pullback from multi-week highs to the dollar JPY=EBS. Toyota 7203.T and Honda 7267.T gained about 1.3% each.

The biggest gainer was 7-Eleven store operator Seven & i Holdings 3382.T, jumping 5.44% after it announced it bought the Australian 7-Eleven chain.