Japan’s Nikkei Inches Lower as Automakers Skid on Yen Strength

Reuters

11:30 JST, November 21, 2023

TOKYO (Reuters) – Japan’s Nikkei share average traded slightly lower on Tuesday, as the yen’s rebound against the dollar prompted a sell-off in automakers’ stocks.

The Nikkei was down 0.1% at 33,362.07 at 0149 GMT, after opening 0.2% higher. The broader Topix slipped 0.32% to 2,364.72.

“The Japanese market did not mirror the overnight Wall Street’s strength because of the yen’s gain against the dollar,” said Masahiro Ichikawa, chief market strategist at Sumitomo Mitsui DS Asset Management.

Wall Street’s three major stock averages closed higher overnight, with Nasdaq’s 1% rally leading the charge as heavyweight Microsoft hit a record high after it hired prominent artificial intelligence executives.

The yen regained its momentum as the dollar dropped to its lowest in more than two months on Monday on expectations that U.S. interest rates have peaked.

Honda Motor lost 2.36% and Toyota Motor slipped 1.56%. Mazda Motor dropped 4.32%.

The autos sector index fell 1.79% to become the worst performer among the Tokyo Stock Exchange’s 33 industry sub-indexes.

A stronger yen weighs on exporters as it hurts the value of overseas profits in yen terms when firms repatriate them to Japan.

“Investors sold stocks also to lock in profits after the Nikkei hit its highest level in more than 30 years in the previous session,” said Ichikawa.

The Nikkei rose to its highest since March 1990 on Monday before reversiong course to end lower.

Trading firms were weak, with Itochu falling 3.77% and Mitsui & Co losing 2.65%,

The wholesales index lost 1.71%.

GS Yuasa tanked 10.58% after the battery maker announced a plan to raise as much as 47.2 billion yen ($315.47 million) in a sale of new shares and third-party allotment to Honda Motor.

Panel display maker Sharp 6753.T jumped 8.16% to become the top performer on the Nikkei.

$1 = 149.6200 yen