Japan’s Nikkei Stock Average Ends Lower as Stronger Yen, Chip Losses Weigh (Update 1)

Reuters

13:11 JST, September 5, 2024 (updated at 17:00 JST)

TOKYO (Reuters) – Japan’s Nikkei share average fell in choppy trade on Thursday, weighed down by a stronger yen and losses in semiconductor-related stocks, while investors await U.S. non-farm payroll data to gauge the strength of the world’s largest economy.

The Nikkei closed at its lowest level since Aug. 14, dropping 1% to 36,657.09, its third consecutive session of losses.

The broader Topix erased early gains to end 0.5% lower at 2,620.76.

The yen touched a one-month high of 143.20 earlier in the session, and has strengthened 1.8% so far this week.

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

“The labor data out so far this week has not really cooled concerns about the U.S. economy, and there is a slight tilt towards expecting the Fed’s first rate cut to be of a larger magnitude,” making the dollar/yen prone to more slides, said Charu Chanana, global market strategist and head of FX strategy at Saxo.

Coupled with expectations for more rate hikes from the Bank of Japan, these currency dynamics “could continue to take some of the speculator froth out of Japanese equities.”

Investors will focus attention on a reading on the U.S. services industry and jobless claims data due later in the day, but the week’s key concern will be Friday’s hotly anticipated August report for nonfarm payrolls.

Among exporters, automaker Toyota Motor slumped 2.2% and tech and entertainment conglomerate Sony Group was down 1.5%.

Chip-related stocks extended losses in the afternoon session, tracking a slump in AI chip firm Nvidia and other U.S. technology shares on Wednesday.

Japan’s Tokyo Electron and Advantest down 2.5% and 2.9%, respectively. Advantest counts Nvidia among its customers.

Among individual stocks, Nippon Steel5401.T reversed from morning gains to end 0.4% lower. Sources told Reuters on Wednesday that U.S. President Joe Biden was close to blocking Nippon Steel’s takeover of U.S. Steel X.N. on national security risks.

Nikkei heavyweight Fast Retailing fell 3.8% to inflict the biggest single blow to the index.