Markets

Japan’s Nikkei Extends Losing Run as Strong Yen Offsets Chip Rally (Update 1)

Yomiuri Shimbun file photo
Tokyo Stock Exchange

Reuters

13:05 JST, July 23, 2024 (updated at 16:00 JST)

TOKYO, July 23 (Reuters) – Japan’s Nikkei share average ended marginally lower on Tuesday, extending its losing run to a fifth consecutive session, as caution over a strengthening yen overshadowed gains in chip stocks.

The Nikkei finished the day down 0.01% – less than 5 index points – at 39,594.39. It rose as much as 0.8% earlier in the session, but failed to reach the psychological 40,000 mark.

A stronger yen threatened to weigh on corporate bottom lines among the Nikkei’s exporter-heavy constituents, just as the earnings season begins to gather pace this week.

The Japanese currency last traded at 156.20 per dollar on Tuesday, after ending last week at 157.50.

The Nikkei sank to a three-week low of 39,519.39 on Monday, after reaching a record peak of 42,426.77 on July 11.

“The market was a little overextended, so some kind of temporary adjustment is to be expected,” said Masayuki Kichikawa, chief Japan macro strategist at Mitsui Sumitomo DS Asset Management.

“There’s been a very visible sectoral rotation since the middle of last week, and tech shares are in an adjustment phase while others are gaining momentum,” he added.

“We think this adjustment will continue for some time, but we don’t think there’s a change in the trend higher.”

Evincing this dynamic, the broader Topix index rose 0.21%, with a subindex of value shares gaining 0.48% while growth shares added just 0.1%.

Chip sector stocks made up the Nikkei’s top two points gainers, tracking a rally in U.S. peers overnight.

Chip-testing equipment maker and Nvidia supplier Advantest advanced 2.87%, followed by a 1.32% rise in chip-making machinery giant Tokyo Electron.

The best performer among the Tokyo Stock Exchange’s 33 industry groups was shipping, which jumped 6.62%, far outpacing second-place banking’s 1.59% advance.

Nippon Yusen was the Nikkei’s biggest percentage gainer, soaring 8.16% after raising its profit forecast. Peers Kawasaki Kisen Kaisha and Mitsui O.S.K. Lines rallied 6.44% and 5.27%, respectively.