Japan’s Nikkei Stock Average Falls Most in a Month on Wall Street Cues, Stronger Yen (Update 1)

Reuters

11:47 JST, November 1, 2024 (updated at 16:20 JST)

TOKYO (Reuters) – Japan’s Nikkei share average closed more than 2% lower on Friday, tracking Wall Street’s weak finish overnight and pressured by a stronger yen.

The Nikkei .N225 fell 2.63% to 38,053.67 in its biggest daily decline since Sept. 30. For the week, the index posted a 0.37% gain.

The broader Topix .TOPX fell 1.9% to 2,644.26, but rose 0.99% for the week.

All three U.S. stock indexes closed lower on Thursday after Microsoft MSFT.O and Meta Platforms META.O highlighted the growing artificial intelligence costs that could hit their earnings, curbing enthusiasm for megacaps that have fueled the market rally this year. .N

On Thursday, the Bank of Japan (BOJ) maintained ultra-low interest rates as widely expected, but its less dovish remarks lifted the yen against the U.S. dollar overnight.

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

“BOJ Governor (Kazuo) Ueda did not use the words he used to use yesterday, which the market took hawkish,” said Shuutarou Yasuda, a market analyst at Tokai Tokyo Intelligence Laboratory.

At the post-meeting news conference on Thursday, Ueda said he will not say the BOJ can “afford to spend time” before deciding when to shift the policy.

Some market participants took this as the BOJ opening its doors for a rate increase as early as December.

Technology investor SoftBank Group 9984.T fell 5.62%.

Uniqlo owner Fast Retailing 9983.T slipped 2.79 to drag the Nikkei the most. Chip-testing equipment maker Advantest 6857.T fell 4.41%.

All but one of the 33 industry sub-indexes on the Tokyo Stock Exchange fell. The glass and ceramics sector .IGLSS.T rose 0.57%. The auto sector .ITEQP.T slipped 2.83%.

Tokai Tokyo’s Yasuda said the Japanese markets would remain volatile next week due to major events – the U.S. Federal Reserve’s policy decision and the U.S. presidential election.