Japan’s Nikkei Posts First Weekly Drop in Five as Tech Drags

Reuters

15:55 JST, December 1, 2023

TOKYO (Reuters) — Japan’s Nikkei share average drifted lower on Friday to post its first weekly drop in five, as tech shares slumped on elevated bond yields after economic data provided more clues that the U.S. Federal Reserve could end rate hikes.

Technology companies tend to be highly leveraged, making them sensitive to changes in interest rates.

The Nikkei ended the day 0.17% lower at 33,431.51, and lost 0.58% this week.

Technology was the only sector to decline in the Nikkei index. Among the 225 components, 97 fell, 125 climbed, while three were trading flat.

The broader, less tech-centric Topix rose 0.32%, but slumped 0.35% for the week. Topix value stocks gained 0.62%, versus a marginal 0.01% climb for growth shares.

Japan’s long-term yields JP10YTN=JBTC added 3.5 basis points to 0.705% on Friday, tracking an overnight rebound in U.S. Treasury yields US10YT=RR, following three days of steep declines.

“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 profit.”

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

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

Startup investor SoftBank Group declined 1.66%, while chip-making equipment giant Tokyo Electron slid 0.73% and chip-testing machinery maker Advantest dropped 1.26%. Shares of TDK slid 1.57%.

The other was heavily weighted Uniqlo store operator Fast Retailing, which fell 1.04%.

At the other end, automakers drew support from the yen’s overnight pullback from multi-week highs to the dollar JPY=EBS. Toyota and Honda  gained close to 1.4% each.

The biggest gainer was Seven & i Holdings, jumping 5.31% after the operator of 7-Eleven stores announced it bought the Australian 7-Eleven chain.