Japan's benchmark stock index snapped a three-day winning streak on Wednesday, dragged lower by a resurgent yen that pressured major exporters, even as semiconductor-related shares posted strong gains.
Market Ends Lower Amid Currency Pressure
The tech-focused Nikkei 225 average declined by 0.1%, closing the session at 50,344.10 points. This reversed gains from earlier in the day. The broader Topix index experienced a steeper fall, dropping 0.5% to settle at 3,407.37. The primary headwind was a strengthening Japanese yen, which reduces the value of overseas profits for the country's export giants.
Exporters and Financials Lead Declines
Automakers were among the notable underperformers. Toyota Motor sank 1.8%, while Subaru lost 1.2%. Key players in the electronics sector also retreated, with Sony declining 1.9% and Nintendo falling 0.8%.
The financial sector gave back some of its recent gains, following the Bank of Japan's landmark interest rate hike last Friday. While higher rates can boost lending profits, the sector saw profit-taking. Insurers as a group fell 1.6%, and banks dropped 1%.
Chip Sector Provides a Lone Bright Spot
In contrast, semiconductor stocks provided significant support to the market, mirroring overnight gains for their peers on Wall Street. Advantest, a heavyweight semiconductor equipment maker, jumped 2.5%, single-handedly adding a substantial 127 points to the Nikkei index.
Tokyo Electron rose 0.7%. The standout performer was Screen Holdings, which surged 10% to become the Nikkei's biggest percentage gainer. This rally came after Morgan Stanley MUFG Securities raised its price target on the stock.
"Japanese chip-related shares are tracking U.S. peers and lifting the overall market," said Wataru Akiyama, a strategist at Nomura Securities. He noted that the Nikkei's outperformance relative to the Topix was clear evidence of this sector-specific strength.
Looking ahead, with holiday-thinned trading in many global markets, Akiyama suggested that significant moves in Japanese equities are unlikely for the remainder of the week. Japanese markets will remain open on Thursday and Friday as usual.
