June 5, 2024 – Tokyo stocks dropped on Wednesday morning, affected by expectations of a stronger yen against the U.S. dollar, which negatively impacted exporters. Financial stocks also declined due to concerns over their earnings outlook.
The Nikkei 225 fell by 309.86 points, or 0.80%, from Tuesday’s close, settling at 38,527.60. Meanwhile, the broader Topix index declined by 32.24 points, or 1.16%, to 2,755.24.
The dollar rose slightly to the mid-155 yen range by late morning, after weakening overnight as a result of falling U.S. long-term interest rates, which raised prospects of a narrowing interest rate gap between the U.S. and Japan, according to market dealers.
By noon, the dollar was trading at 155.48-49 yen, compared to 154.86-96 yen in New York and 155.38-40 yen in Tokyo on Tuesday evening.
The euro was quoted at $1.0883-0884 and 169.21-24 yen, against $1.0873-0883 and 168.41-51 yen in New York, and $1.0889-0891 and 169.20-24 yen in Tokyo late Tuesday afternoon.
The stock market was under pressure from heavy selling in insurance and banking stocks, driven by increasing concerns that a decline in U.S. interest rates could squeeze their profitability.
Among exporters, automakers saw significant losses as investors worried that a stronger yen could reduce their overseas profits when converted back to yen. Technology stocks also fell, following an overnight drop in a key U.S. semiconductor index, brokers noted.
