Japan’s Nikkei Reverses Early Gains as Nidec Tumbles on Profit Outlook

Reuters

12:29 JST, October 24, 2023

TOKYO, Oct 24 (Reuters) – Japan’s Nikkei share average gave up early gains to trade lower on Tuesday, dragged down by losses in Nidec shares after the electric motor maker kept its annual profit outlook despite a rise in quarterly earnings.

The Nikkei .N225 had fallen 0.55% by the midday break after opening 0.51% higher. The index fell as much as 1.4% and was on course for a fourth straight session of losses.

The broader Topix .TOPX was down 0.64% at 2,224.59 after touching its lowest since June 8.

Shares of Nidec 6594.Ttumbled 10%, with some analysts saying the unchanged profit outlook of 220 billion yen ($1.47 billion) for the year to March 2024 came short of market consensus.

Kyoto-based Nidec posted a 7.6% rise in quarterly operating profit on Monday, helped by stronger sales and a weaker yen.

“Nidec’s outcome hurt investor sentiment. It seems to have been affected by a slowdown of the Chinese economy,” said Shuutarou Yasuda, a market analyst at Tokai Tokyo Research Institute.

“Investors expect Nidec to boost its earnings… The currency factor is not a preferred driver for Nidec’s earnings.”

Rising U.S. Treasury yields also weighed on sentiment, strategists said. The 10-year yield US10YT=RR rose above 5.0% overnight to hit the July 2007 milestone.

Japan’s 10-year bond yield JP10YTN=JBTC rose in early trade but retreated after the Bank of Japan announced an emergency bond buying.

Chip-related shares also weighed on the Nikkei, with Tokyo Electron 8035.T and Advantest 6857.T falling 1% and 0.56%, respectively.

Bucking the trend, Uniqlo brand owner Fast Retailing 9983.T rose 0.33% and technology start-up investor SoftBank Group 9984.T gained 0.82%.

All but four industry sub-indexes fell, with shipping firms .ISHIP.T losing 3.16% to become the worst performer among the 33 industry groups.

Airlines .IAIRL.T rose 0.97% to become the top performer.