Following rallies on Wall Street where investors believed that the Fed may postpone its rate hikes, Tokyo markets opened lower on Monday as the yen rose against the dollar. Tokyo Equities
Early trading saw a decline of 1.14 percent, or 297.98 points, in the benchmark Nikkei 225 index to 25,821.54, while a decline of 0.62 percent, or 11.89 points, was seen in the larger Topix index to 1,891.19.
In early Asian trade, the dollar was valued at 128.04 yen, compared to 127.87 yen on Friday in New York, when the yen strengthened from 129.11 in Asian trade earlier in the day.
Generally speaking, a stronger yen is bad for Japanese exporters.
“Japanese shares are seen starting with losses, with investors disheartened by the strong yen,” said senior market analyst Toshiyuki Kanayama of Monex.”
Wall Street equities ended a strong week on a high note on Friday, overcoming early weakness to advance amid a recovery in banking shares.
According to economists, a surprise positive consumer sentiment data from the University of Michigan contributed to the reversal.
“The US market last weekend was supported by speculation that the pace of rate hikes (by the US Federal Reserve) will slow” following the data, Kanayama said.
“A combination of upward pressure on Japanese yields and a paring of US rate hike expectations has seen some reversal of earlier depreciation pressure for the yen as rate differentials with the US widened,” said National Australia Bank economist Taylor Nugent.
Honda fell 1.76 percent to 3,013 yen, Nissan down 1.88 percent to 411.5 yen, and Toyota fell 0.91 percent to 1,799 yen, making the auto industry one of the losers in Tokyo.
Bank stocks also fell, with Sumitomo Mitsui Financial down 1.26 percent to 5,648 yen and Mitsubishi UFJ Financial down 1.07 percent to 966.6 yen.
While Panasonic increased by 0.41 percent to 1,107.5 yen and Sony Group increased by 0.46 percent to 11,015 yen, respectively. Tokyo Equities
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