Japan’s 225-issue Nikkei average touched a more than five-week low on Thursday as the yen’s gain against major currencies hurt investor sentiment, while chip-related stocks tracked their U.S. peer’s decline.
The Nikkei hit its lowest level since June 17 at 37,959.07, before ending the morning session down 2.53% at 38,165.19. The broader Topix fell 2.16% to 2,732.83.
“The market turned cautious about the yen’s gain against the dollar and other major currencies. That hurt investor sentiment,” said Yugo Tsuboi, chief strategist at Daiwa Securities. “And worries about the U.S. economic slowdown seemed to have sent Wall Street lower overnight,” Tsuboi added.
The S&P 500 and Nasdaq ended at multi-week lows on Wednesday, with the S&P snapping one of its longest streaks without a daily decline of more than 2%, as lackluster Alphabet and Tesla earnings undermined investor confidence in megacap names.
Technology investor SoftBank Group slipped 7.61%, putting the most drag on the Nikkei. Chip-related shares fell, with Tokyo Electron and Advantest declining 4.49% and 7.23%, respectively.
Renesas Electronics slumped 16.72% to its daily limit low after the chipmaker reported a 29% decline in a net profit for six months to June.
The yen rose to its highest level in 2½ months as traders abandoned short yen bets in the run-up to the Bank of Japan’s July meeting, where a rate hike remains on the cards.
A stronger yen tends to hurt exporter shares as it decreases the value of overseas profits in yen terms when firms repatriate them to Japan.
Among stocks that rose was frozen-food maker Nichirei, gaining 4% to become the top performer on the Nikkei. Beer brewer Sapporo Holdings advanced 3.22%.
All but four of the Tokyo Stock Exchange’s 33 industry sub-indexes fell. The airline sector inched up 0.32% to become the top-performing sector.