Nikkei 225 Extends Two-month Losses to 8%, BoJ Policy Uncertainty Keeps Indexes In Downward Trend

Akira Ito
30 May, 2024
Tokyo

The yen's weakening,  the prospect of higher U.S. interest rates, and a lack of progress in Japanese corporate governance dragged lower market indexes in Japan. 

The Nikkei 225 and the Topix indexes dropped to one-month lows and extended losses to close to 8% from the peak in March. 

Surging global bond yields lifted the yield on a 10-year Japanese government bond to above 1.1%, a 13-year high. 

The yen declined and traded at 156.82 against the U.S. dollar and approached the record low against the euro on the worry that the wide rate differential with U.S. and Euro Area bonds is likely to persist well into 2026. 

The hawkish comments from U.S. Federal policymakers and tepid demand for the U.S. Treasury auctions this week also dampened market sentiment. 

Closer to home, investors are looking ahead to the release of the Tokyo area's inflation data on Friday, which also provides insights into nationwide price trends. 

 

Japan Stock Movers 

The Nikkei 225 stock average dropped 1.7% to 37,899.21, and the Topix index decreased 0.8% to 2,719.10. 

Tech stocks led the declines amid worries that higher interest rates would dampen future earnings streams. 

Tokyo Electron, Advantest, Lasertec, and Screen Holdings declined between 3% and 6%. 

Terumo Corp., the maker of medical devices and supplies, declined 2.8% to ¥2,620.0; Nissan Chemical dropped 4.9% to ¥4,309.0; and Fanuc Corp., the manufacturer of advanced automation products, declined 1.6% to ¥4,442.0. 

The four largest trading companies in Japan, Itochu, Marubeni, Sumitomo, and Mitsui, declined between 1.5% and 2.5% amid general market weakness.