Japanese equities experienced a downturn today, with the Nikkei 225 Stock Average falling to a three-week low following weak US labor market data that heightened concerns over a potential slowdown in the world’s largest economy. The index closed down 1.1% at 36,657.09, marking its lowest point since August 14. The broader Topix index also declined by 0.5%, ending the day at 2,620.76, with both indexes dipping below their 25-day moving averages.
Kentaro Hayashi, a senior strategist at Daiwa Securities, commented, “The recent softness in US economic data has instilled caution in the market. We expect continued volatility until Friday’s US payroll data is released.”
The decline was led by chip-related stocks, while financial shares were pressured by lower bond yields. Additionally, exporters, including car manufacturers, faced losses as the yen approached its highest level in seven months.
The yen strengthened by more than 1% overnight, driven by expectations that the Federal Reserve might cut rates later this month. Concurrently, data indicating an increase in Japanese workers’ real wages for the second consecutive month spurred speculation that the Bank of Japan could consider a rate hike later in the year.
Despite the overall market drop, domestic demand-driven stocks, such as train operators and food companies, received a boost from the wage data, resulting in a near balance between advancing and declining stocks.
In notable stock movements, Nomura Research Institute Ltd., a Japanese IT services and consulting firm, surged 3% to a record high following its inclusion in the Nikkei 225. Mitsubishi Logistics Corp. saw a 5.4% increase as it remained in the index despite predictions of its removal.
Conversely, shares of Nippon Steel Corp. fell 0.4% after reports suggested that US President Joe Biden might block its $14.1 billion acquisition of United States Steel Corp.
