Japan’s Nikkei Stock Average Slips as Yen Gains; Higher Bond Yields Lift Banks (Update 1)

Reuters

11:56 JST, September 3, 2024 (updated at 16:00 JST)

TOKYO (Reuters) – Japan’s Nikkei share average edged lower on Tuesday as a firmer yen weighed on investor sentiment, although banks provided a bright spot amid higher bond yields at home and abroad.

The Nikkei ended the day down 0.04% at 38,686.31, giving up early gains as the yen changed course to strengthen as much as 0.5% against the dollar from a two-week low hit earlier in the session.

The broader Topix , with its lower proportion of tech companies and other exporters, advanced 0.64%. A sub-index of value shares rallied 0.91%, outperforming a 0.35% rise in growth shares.

At the same time, an air of caution prevailed over the market ahead of a parade of key U.S. economic data this week, particularly monthly non-farm payroll figures due Friday.

“The overarching theme in the market continues to be the outlook for monetary policy in Japan and the United States,” said Maki Sawada, an equities strategist at Nomura Securities.

“Depending on the result of the jobs report, there is the potential for the market to swing sharply.”

Banks and insurers and were the top performers among the Tokyo Stock Exchange’s 33 industry groups, jumping 3% and 2.5% respectively. Lender Resona Holdings was the Nikkei’s biggest percentage gainer, with a 6.6% surge.

Long-term Japanese government bond yields JP10YTN=JBTC rose to the highest in about a month, while equivalent U.S. Treasury yields US10YT=RR also gained after a holiday on Monday. Higher long-term yields boost revenue from investing and lending.

Meanwhile, semiconductor-related shares sank, with chip-testing equipment manufacturer Advantest slumping 2.25% after starting the day with gains of as much as 3.43%. Chip-making machinery giant Tokyo Electron eased 1.49%.

Other exporters were mixed, with Toyota Motor losing 0.32% but Nissan adding 0.42%. Shares of Sony Group appreciated 0.64%.