Japan’s Nikkei Stock Average Ends Lower as Stronger Yen Drags Ahead of US Jobs (Update 1)

Reuters

13:06 JST, August 21, 2024 (updated at 16:00 JST)

TOKYO (Reuters) – Japan’s Nikkei share average edged down on Wednesday as yen gains weighed on domestic stocks.

The Japanese currency strengthened back to the 145 levels per dollar after falling as far as 147.34 the previous day, although a halt in the yen’s rise helped narrow equity losses in the Asian afternoon.

Nikkei finished 0.3% lower at 37,951.8 after falling 1% in early trade, while the broader Topix fell 0.2% to 2,664.86.

Japanese equities have bounced between gains and losses this week as the yen fluctuated.

A stronger yen tends to drag on exporter shares as it decreases the value of overseas profits in yen terms when firms repatriate them to Japan.

It was trading around 145.74 per dollar when the market closed, after touching a high of 144.945.

“There are still structural themes supporting Japanese equity markets, but yen risks keep us neutral in our tactical view,” said Charu Chanana, global market strategist and head of FX strategy at Saxo.

A wide berth of shares traded in the red, with major chip-related shares among them also weighing on the Nikkei following declines in their U.S. peers.

Tokyo Electron fell 1.4%, while Advantest and Shin-Etsu Chemical were both down about 2%.

Among other shares, Seven & I Holdings was up 5.8% after slumping on Tuesday as investors continued to weigh a takeover proposal from Canada’s Alimentation Couche-Tard.

Cosmetic company Shiseido slid about 6% to become the biggest percentage loser.

Uniqlo parent firm and Nikkei heavyweight Fast Retailing ticked down 0.5%.

Markets now await the release of preliminary benchmark revisions to U.S. employment data for the 12 months through March, due later on Wednesday.

A revision closer to 1 million fewer jobs created than previously estimated could renew concerns about the U.S. labor market and generate more market volatility, said Saxo’s Chanana.