Japan’s Nikkei Closes at One-Month Low on Mixed US Tech Earnings, Yen Rally (Update 1)

Reuters

12:43 JST, July 24, 2024 (updated at 16:00 JST)

TOKYO, July 24 (Reuters) – Japan’s Nikkei share average closed lower for a sixth consecutive session on Wednesday, as mixed earnings from major U.S. tech firms and the yen’s continued rally weighed.

The Nikkei fell 1.11% to a one-month closing low of 39,154.85, also marking its longest losing streak since October 2021.

The broader Topix slid 1.42% to 2,793.12.

Wall Street had ended slightly lower on Tuesday, as investors awaited earnings from Alphabet and Tesla.

While Alphabet beat second-quarter earnings estimates, Tesla reported its lowest profit margin in more than five years and missed estimates.

Meanwhile, the yen rallied to a seven-week high of 154.36 per dollar on Wednesday, as markets priced in a 56% chance of a rate hike at the Bank of Japan’s July 30-31 monetary policy meeting.

A stronger yen tends to hurt exporter shares, as it decreases the value of overseas profits in yen terms when firms repatriate them to Japan.

Traders will likely remain cautious of testing the limits of yen weakness even if the BOJ doesn’t strike a hawkish note next week, said Charu Chanana, global market strategist and head of FX strategy at Saxo.

“This means broader Japanese equities could face further headwinds, especially if Big Tech earnings fail to meet the massive expectations.”

The U.S. Federal Reserve will also meet next week, while Japan’s earnings season will kick into high gear.

Uniqlo parent Fast Retailing fell 0.8%, chip-making equipment giant Tokyo Electron was down 0.9%, and silicon wafer maker Shin-Etsu Chemical declined 2.3% to become the biggest drags on the Nikkei.

The benchmark index hit a record high of 42,426.77 on July 11 but has since suffered a string of losses as chip shares underperformed and the yen sharply appreciated from the 161 range.

In individual stocks, Nidec jumped 6.1% after the electric motor maker raised its full-year operating profit forecast on Tuesday.

Mitsubishi Motors slid 7.4% on disappointing profits, becoming the worst percentage performer.