Japan’s Nikkei Eases on Profit Taking; Automakers Drag (UPDATE 1)

Reuters

12:40 JST, June 4, 2024 (updated at 15:15 JST)

TOKYO (Reuters) – Japan’s Nikkei share average fell on Tuesday as investors booked profits after a recent rise, while top automaker shares struggled after Japan’s transport ministry found irregularities in applications to certify certain models.

Toyota Motor shares were down 1.29%, and Honda Motor slid 2.24%.

The Nikkei eased 0.22% to 38,837.46, having rebounded to touch 39,000 on Monday. The broader Topix shed 0.38% at 2,787.48.

With little in the way of new cues for the market to go on, investors locked in profits following two consecutive days of gains in the market.

Japanese equities received limited support from Wall Street, after the S&P 500 and the Nasdaq edged higher in a choppy session overnight, while the Dow lost ground.

The Nikkei climbed to an all-time peak of 41,087.75 on March 22, but retreated the following month. While the benchmark index touched the 39,000 level in May and again on Monday, it has failed to maintain the range.

“I think the market is struggling to find the new theme or driver to bring it up,” said Naka Matsuzawa, chief macro strategist at Nomura.

“Dollar/yen is no longer rising, seems like commodity prices have kind of peaked out… and inflation expectations globally are down.”

Although dollar/yen appears largely range-bound for now, the yen sitting at a 34-year trough has also fueled bets for the Bank of Japan to hike interest rates sooner this year, perhaps as early as July.

“That all makes people hesitant,” said Matsuzawa.

Still, the Nikkei remains up 16% for the year so far, with analysts forecasting it will trade at 40,750 at the end of this year.

Among stocks, a portion of heavyweights stumbled to drag on the overall index, with Uniqlo parent firm Fast Retailing declining 1.03% and AI-focused startup investor SoftBank Group falling 1%.