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Japan’s Nikkei falls on Wall Street weakness and BOJ uncertainty

May 17, 2024

Key points:

  • Nikkei ends lower after a three-day winning streak, influenced by Wall Street and BOJ policy.
  • Broader Topix index posts a weekly gain despite early losses.

Japan’s Nikkei share average snapped a three-day winning streak to close lower on Friday, influenced by Wall Street’s tepid overnight performance and uncertainties surrounding the Bank of Japan’s (BOJ) policy trajectory. The Nikkei slipped 0.34% to finish at 38,787.38, although it still gained 1.43% for the week.

Picture: Japan’s Nikkei’s decline, as observed on the VT Markets app.

BOJ bond-buying operation provides relief

Despite the dip, the index managed to recoup some losses after the BOJ maintained its regular bond-buying operation amounts. Earlier in the week, the central bank had unexpectedly reduced the amount for bonds with 5-10 years left to maturity, sparking speculation about continued hawkish moves.

The broader Topix index bounced back from early losses to end 0.3% higher at 2,745.62, securing a 0.64% weekly gain.

US stocks dip despite Dow’s milestone

In the United States, stocks closed lower on Thursday after the Dow Jones Industrial Average hit an intraday high of 40,000 for the first time. Investors continued to recalibrate their rate-cut expectations following data showing a slowdown in inflation. The Philadelphia SE Semiconductor Index lost 0.55%.

You might be interested: US economic indicators continue to influence Yen performance

Chip stocks lead decline in Japan

In Japan, chip-related shares fell on Friday, with Tokyo Electron dropping 2.01%, becoming the biggest drag on the Nikkei. Silicon wafer maker Shin-Etsu Chemical fell 1.52%. Conversely, Toyota Motor rose 2.51%, providing the biggest boost for the Topix. Banking giants Mitsubishi UFJ Financial Group and Sumitomo Mitsui Financial Group gained 2.04% and 3.44%, respectively, with the banking sector rising nearly 2% to become the top performer among the Tokyo Stock Exchange’s 33 industry sub-indexes.

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