Japanese Stocks Weaken, Yen Strengthens
Japanese stocks corrected after a strengthening yen weighed on exporters' performance, amid the increasing number of Fed interest rate policy announcements due to Donald Trump's numerous moves to announce one of his governors. The Topix fell 1.1% to 3,071.99—its biggest daily decline since August 14—while the Nikkei weakened 1% to 42,394.40 at the close of trading in Tokyo.
Export-related sectors such as electronics were the main drags on the Topix, followed by IT and automotive. Sony was the largest contributor to the benchmark index's decline, falling 1.9%. Sentiment was further boosted after the yen broke through 147 per dollar on Tuesday following news that Trump would remove Fed Chair Lisa Cook, although the dollar later pared losses after Cook confirmed she would not resign. According to Anna Wu (VanEck, Sydney), such news fuels concerns about the Fed's independence and increases volatility.
Going forward, this warming has the potential to trigger a rally in the dollar against the yen, which is typically a headwind for Japanese stock exporters. Hiroshi Namioka (T&D Asset Management) believes that if Trump pushes for interest rate cuts too quickly, the risk of US inflation increasing, which is negative for equities. He added that the Japanese market is vulnerable to profit-taking as it recently hit a record high, with some signs of overheating.
At the issuer level, Nissan was the worst performer on the Nikkei, plummeting 6.8% after news that the Mercedes-Benz Pension Trust sold its stake in the carmaker. Tokyo Electric Power Company (TEPCO) also fell 8% to its lowest level today, triggered by profit-taking following the previous rally related to the expected restart of one of Japan's nuclear power plants. (ayu)
Source:Newsmaker.id
