Japan’s Nikkei share average experienced its third consecutive decline on Wednesday, closing below 38,000 points for the first time in two months amidst escalating tensions in the Middle East, which weighed heavily on investor sentiment. The Nikkei concluded the day down 1.3% at 37,961.80, marking its lowest closing level since February 14. This decline also positioned the index for its most significant weekly loss since December 2022. The broader Topix index mirrored this downturn, dropping 1.3% to 2663.15.
Despite opening on a positive note, the Nikkei failed to sustain its early gains as caution prevailed among investors due to ongoing uncertainties regarding the Middle East situation. Additionally, with Japan’s earnings season about to commence, investors adopted a cautious approach, particularly ahead of key companies like Advantest, scheduled to report earnings next week. Analysts observed a trend of profit-taking prior to earnings announcements as companies provide guidance for the new fiscal year.
Overnight, U.S. stocks displayed mixed performance, contributing minimally to the Nikkei’s support, while Federal Reserve Chair Jerome Powell’s remarks on the necessity of maintaining restrictive monetary policies for an extended period further diminished hopes for significant interest rate cuts this year.
The Nikkei saw widespread losses across its constituents, with only 32 of its 225 companies registering gains. Chip-related firms bore the brunt of the decline, with Advantest plummeting 4.5%, Lasertec sliding 7.9%, and Tokyo Electron dipping 1%, emerging as the major laggards on the index. Other notable declines included Fanuc Corp, experiencing a 3.3% drop, and SoftBank Group, declining by 1.3%. However, Resonac Holdings bucked the trend, surging 12% following an upward revision of its revenue forecast for 2024.
