Yen and Tech Stock Weakness Drive Stock Market Volatility In Japan

Akira Ito
17 May, 2024
Tokyo

Stocks in Tokyo struggled in Friday's trading as investors digested the latest update on GDP and the movement in currency trading. 

Market sentiment in Tokyo was cautious a day after Japan's GDP report showed an annual contraction of 2%, and private sector consumption fell for the fourth quarter in a row. 

The ongoing natural disaster-related challenges and scandal-ridden production halts at Toyota's Daihatsu Motor also contributed to the economic contraction. 

The yen eased to 155.76 against the U.S. dollar after the currency faced renewed pressure on speculation that the Bank of Japan continued to buy Japanese government bonds in  the amount matching the previous operation. 

Bank of Japan Governor Ueda is widely anticipated to announce the central bank's bond buying program at the next meeting in June. 

Earlier in the month, Governor Kazuo Ueda confirmed that the central bank has no plans to sell its exchange-traded fund holdings. 

 

Japan Stock Movers 

Stocks in Tokyo traded lower, and tech stocks led the decliners and reversed the previous day's gains. 

The Nikkei 225 Stock Average fell 0.6% to 38,703.95, and the Topix index advanced 0.1% to 2,740.22. 

For the week, the Nikkei index increased 1.7% and extended this year's gain to 16.4%. 

The Topix index added 0.8% in the week and advanced 15.2% in the year so far. 

Tokyo Electron, Advantest, Screen Holdings, and SoftBank declined between 1% and 3%. 

Banks were in focus in Friday's trading after investors debated the future rate paths and assessed the impact of a weaker yen on corporate profits. 

Mitsubishi UFJ and Mizuho Financial Group rose about 1.7%, but Sumitomo Mitsubishi Financial declined 1.8%. 

Japan Steel Works rose 6.5% to 4,434.0 yen, and earlier in the week, the steelmaker reported slower annual revenue growth in the fiscal year ending in March. 

Revenue increased 5.8% to 252.5 billion yen from 238.7 billion yen, profit attributable shareholders rose 19.2% to 14.3 billion yen, and earnings per share increased to 194.02 yen from 162.75 yen a year ago. 

The company declared an annual dividend of 29 yen, matching the previous year, and the total dividend increased to 59 yen from 58 yen a year ago.