Japan’s Nikkei Tracks Wall Street Lower; US Jobs in Focus (Update 1)

Reuters

12:15 JST, December 7, 2023 (updated at 16:00 JST)

TOKYO (Reuters) – Japan’s Nikkei share average fell sharply on Thursday following Wall Street declines overnight ahead of key jobs data that should provide clues on how soon the U.S. Federal Reserve could start cutting interest rates.

The Nikkei dropped 1.76% to 32,858.31 as of the close, with 189 of its 225 components declining and 36 rising.

That undid the bulk of the index’s more than 2% rebound on Wednesday from a three-week low.

Thursday’s drop put the Nikkei back on course for its worst week since mid-October, down 1.72% so far.

The broader Topix sank 1.14%, heading for a 0.95% decline for the week, which would also be the worst performance since mid-October.

Amid a lack of domestic drivers, investors are taking cues from overseas markets and the currency exchange rate, while waiting for Friday’s release of the monthly U.S. non-farm payrolls report, said Maki Sawada, a strategist at Nomura Securities.

However, the Nikkei’s declines are likely to be limited by the 25-day moving average at around 32,800, she said.

Energy was the biggest decliner among the Nikkei’s industry groupings, after crude oil dropped to six-month lows.

Chip shares were also standout underperformers, making up two of the Nikkei’s three biggest drags.

Chip-making equipment giant Tokyo Electron shaved 83.4 points from the index with a 3.59% slide, followed by 75.9 points by Uniqlo store operator Fast Retailing, which dropped 2.06%. Chip-testing equipment maker Advantest was third, erasing 55.4 points with a 4.69% slide.

Automakers were weak amid a strengthening yen, which cuts the value of foreign sales. Toyota slid 1.15%, Honda sank 2% and Nissan eased 1.81%.

Rakuten Group slipped 0.31% after the e-commerce and fintech giant announced it would sell nearly 15% of the online bank unit, Rakuten Bank. Shares in the lender tanked 8.69%.