TOKYO, Dec. 2 (Xinhua) — Japan’s benchmark stock index closed at a three-week low on Friday, as technology shares dragged and the yen’s strength hurt exporters following the U.S. central bank signaling a more dovish stance on its interest rate hikes.
The 225-issue Nikkei Stock Average dropped 448.18 points, or 1.59 percent, from Thursday to close the day at 27,777.90, marking its lowest level since Nov. 10.
The broader Topix index, meanwhile, lost 32.48 points, or 1.64 percent, to finish at 1,953.98.
Dealers here said that export-oriented issues came under pressure following U.S. Federal Reserve Chairman Jerome Powell on Wednesday indicating a slowing of the pace of its aggressive interest rate hikes.
Powell suggested this could begin following the outcome of the Fed’s policy-setting meeting later this month, they added.
As a result of the Fed’s more dovish tone on the future course of its interest rate hikes, the yen remained firm against the U.S. dollar, investment analysts said.
The yen was predominantly trading in the lower 135 level against the dollar in Tokyo, which weighed on exporters who typically cheer a weaker yen versus its major counterparts, as overseas profits are boosted when repatriated, market strategists said.
“Many Japanese companies have their assumed dollar-yen rate set around 135, so additional yen strength has a very high probability of becoming a drag on earnings,” Kazuo Kamitani, a strategist at Nomura, was quoted as saying.
After offloading exporter issues, market analysts said that amid a lack of solid cues, investors hit the sidelines ahead of the release later in the day of key U.S. employment data, which is expected to inform the Fed’s upcoming decision on its interest rate hike.
“With the market’s focus shifting to the Fed’s policy meeting, we can not expect active buy orders from investors,” Toshikazu Horiuchi, equity strategist at IwaiCosmo Securities Co., was quoted as saying.
Pharmaceutical, real estate, and wholesale issues comprised those that declined the most.
Exporter-oriented shares being sold owing to the yen’s strength included Toyota reversing 1.4 percent and Nissan dropping 3 percent. Mitsubishi Motors, meanwhile, was the Nikkei’s worst performer slumping 5.9 percent.
Nikkei heavyweight Fast Retailing, operator of the Uniqlo clothing chain stores, dragged the broader market lower, ending the day down 1.7 percent.
But World Cup soccer-linked shares marked some bright spots, following Japan’s shock victory over Spain tacking the Samurai Blue into the competition’s knockout stages.
Online broadcaster CyberAgent, whose Ameba app is showing all the World Cup matches in Qatar on its platform, added 4 percent, while British-themed pub, Hub, which is screening the matches, soared 7 percent.
Sports goods retailer Xebio Holdings, meanwhile, closed the day 1.2 percent higher.
Issues that fell outpaced those that rose by 1,637 to 167, while 32 ended the day unchanged.
On the Prime Market on Friday, 1,333.29 million shares changed hands, rising from Thursday’s volume of 1,244.98 million shares.