Tokyo Indexes Struggle After Tech Stock Weakness, Sumitomo Pharma Plunges 7%

Akira Ito
02 May, 2024
Tokyo

Stocks in Tokyo declined, and the yen rebounded for the second day in a row, amid tech stock weakness and the possible intervention by the central bank. 

The Nikkei and the Topix indexes lacked direction in Thursday's trading after the U.S. Federal Reserve held rates steady but signaled that the future rate path is highly uncertain. 

Fed Chair Jerome Powell also ruled out the possibility of a rate hike in the immediate future and confirmed that inflation has moderated over the last year, but progress has stalled in recent months. 

Powell added that the central bank is prepared to keep rates high as long as needed until it gains greater confidence that inflation is on the path of its target rate of 2%. 

Closer to home, the minutes of the Bank of Japan's policy meeting held on March 18 and 19 showed Thursday that policymakers believe the central bank's inflation target of 2% is within reach. 

Moreover, the monetary base increased 2.1% from a year ago in April to 689.896 trillion yen, and the adjusted monetary base soared 11.4% from a year ago. the Bank of Japan said Thursday. 

The Japanese yen rebounded for the second day in a row to 155.70, stoking speculation that the Bank of Japan, in coordination with the ministry of finance, intervened for the second day in a row. 

Tech stocks in the U.S. sold on the worry that higher rates are likely to stay elevated amid positive U.S. economic data and resilient labor market conditions. 

The Nikkei 225 Stock Average decreased 0.07% to 38,245.08, and the Topix index declined a fraction to 2,729.17. 

Tech stocks in Japan followed the weakness in New York. 

Tokyo Electron, Advantest, Socionext, SoftBank, and Screen Holdings decreased between 0.3% and 1.8%. 

Financial stocks were also among the leading decliners after the U.S. rate decision announcement. 

Sumitomo Mitsui Group declined 1.2% to ¥8,881.0, Mitsubishi UFJ fell 0.5% to ¥1,557.50, and Mizuho Financial Group eased 0.3% to ¥3,010.0.

Sumitomo Pharma dropped 7% to ¥373.0 after the company reported lower-than-estimated revenue and higher-than-estimated losses in the fiscal year 2024 ending in March. 

Revenue was revised lower to 314.6 billion yen from the previous estimate of 317 billion yen, and net loss attributable to shareholders was revised higher to 315 billion yen from the previous estimate of 147 billion yen. 

The loss per share was revised to 792.86 yen from the previous estimate of 354.90 yen. 

The company also suspended its dividend after the sharp decline in core profit.