Nikkei Closes Lower as Chip Stocks Drag, Investors Focus on Earnings (Update 1)

Reuters

13:41 JST, October 17, 2024 (updated at 16:20 JST)

TOKYO, Oct 17 (Reuters) – Japan’s Nikkei share average closed lower on Thursday, as chip stocks slid despite industry star TSMC reporting better-than-expected earnings, while investors waited for more earnings results from domestic and overseas firms for further direction.

The Nikkei fell 0.7% to a one-week closing low of 38,911.19, while the broader Topix finished 0.1% lower at 2,687.83.

Major technology stocks fell for a second session and dragged the Nikkei lower, after ASML’s cut to annual sales forecast sparked concerns about demand, sending chip-related shares tumbling in the previous session.

Tech losses briefly narrowed after Taiwan Semiconductor Manufacturing Co, the dominant producer of advanced chips used in artificial intelligence applications, reported a forecast-beating 54% jump in its third-quarter profit.

Shares of chip-testing equipment maker Advantest recovered somewhat to end down 0.6%, while chip-making equipment giant Tokyo Electron declined 3.2% to become the biggest drag on the Nikkei. Silicon processor Shin-Etsu Chemical slid 1.4%.

Chip-making device supplier Disco was down 1.5% ahead of its earnings results later in the day.

Selling broadened in afternoon trade, with 127 of the Nikkei’s 225 constituents ending in negative territory, including heavyweight Fast Retailing, which fell 1.1%.

Manufacturers will start reporting their earnings in earnest starting next week, something investors are also likely eying, said Nomura strategist Maki Sawada.

“It feels like (today’s market moves) are mainly adjustments to positions in anticipation of those announcements,” the strategist said.

Auto stocks closed higher as the yen struggled not far off the 150-per-dollar level in a boost for exporters, although gains shrank from the morning.

Subaru Corp rose about 2.3%, Nissan Motor gained 1.3% and Toyota Motor climbed 1%.

Exporters tend to benefit from a weaker domestic currency when overseas earnings are repatriated.

Financials were up after their U.S. peers helped Wall Street close higher on Wednesday, with Mizuho Financial Group rising 2.2% and Mitsubishi UFJ Financial Group gaining 1.9%.