(BFM Bourse) – The Nikkei 225 fell by 4.2% on Wednesday, weighed down by a renewed strength of the national currency but also by a general downward movement of the market caused by the fall of American indices.
Tensions are rising again on the Tokyo Stock Exchange. The Japanese stock market fell sharply on Wednesday, with the Nikkei 225, the benchmark index, dropping 4.24% to 37,047 points. The broader Topix index dropped 3.65%.
Japanese markets were shaken by “the weakness of US stocks the day before and by the liveliness” of the yen, commented analyst Toshiyuki Kanayama of Monex, quoted by AFP. The yen is regaining some strength. The dollar thus dropped 0.97% against the Japanese currency on Tuesday, and fell another 0.2% on Wednesday.
The Japanese currency was notably supported by comments made on Tuesday by the governor of the Bank of Japan, Kazuo Ueda, who reiterated that the institution was ready to raise its rates if the economy and prices behave as expected, Bloomberg reports.
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US indices fall
These rate hikes would certainly strengthen the yen, as other major central banks, such as the European Central Bank and soon the US Federal Reserve, lower their key rates.
Given that the Japanese economy remains very industrial and export-oriented, a rise in the yen penalizes Japanese stocks, especially since it also translates into a fall in corporate profits, via a simple conversion effect for income coming from abroad.
The fall of the Tokyo Stock Exchange is also part of a global movement of risk aversion, in the wake of the fall of the American markets.
On Tuesday evening, the American indices suffered, with the Nasdaq dropping 3.3% with dizzying falls on the semiconductor side. Nvidia lost 9.5% and AMD 7.8%.
This wave of decline was triggered by a disappointing ISM manufacturing index for August. This bad statistic revived fears about American and therefore global growth, triggering violent corrections in the sectors that have posted the best performances since the beginning of the year, such as tech.
The “disappointing ISM manufacturing index confirms that the industrial cycle is degraded, even in the United States where demand is nevertheless solid, which is not encouraging for the dynamism of growth”, judges Xavier Chapard of LBPAM.
Julien Marion – ©2024 BFM Bourse
