Japan’s 225-issue Nikkei index hit a more than five-week low on Thursday as the yen’s rise against major currencies weighed on investor sentiment, while chip-related stocks followed the decline in their U.S. counterparts.
The Nikkei touched its lowest level since June 17 at 37,959.07 before closing the morning session down 2.53% at 38,165.19. The broader Topix fell 2.16% to 2,732.83.
“The market turned cautious about the yen’s gains against the dollar and other major currencies, hurting investor sentiment,” said Yugo Tsuboi, chief strategist at Daiwa Securities. “And worries about the U.S. economic slowdown appeared to have sent Wall Street lower overnight,” Tsuboi added.
The S&P 500 and Nasdaq closed at weekly lows on Wednesday, the S&P snapping one of the longest streaks without a daily decline of more than 2% as disappointing earnings from Alphabet and Tesla undermined investor confidence in mega-caps.
Technology investor SoftBank Group fell 7.61%, weighing down the Nikkei the most. Chip-related stocks fell, with Tokyo Electron and Advantest down 4.49% and 7.23% respectively.
Renesas Electronics fell 16.72% to a daily low after the chipmaker reported a 29% drop in net profit for the six months through June.
The yen rose to a 2½-month high as traders abandoned short-yen bets ahead of the Bank of Japan’s July meeting, where a rate hike remains on the agenda.
A stronger yen typically has a negative impact on exporters’ stocks, as the value of overseas earnings in yen terms falls as companies repatriate them to Japan.
Among the stocks that rose was frozen food maker Nichirei, which gained 4 percent to become the Nikkei’s best performer. Beer maker Sapporo Holdings rose 3.22 percent.
All but four of the Tokyo Stock Exchange’s 33 sub-indices fell. The airline sector rose 0.32 percent, making it the best-performing sector.
