The Japanese stock market experienced a significant drop on Wednesday, shedding some of the significant gains it made in the previous trading session. This downward turn followed mixed signals from Wall Street overnight, affecting the Nikkei 225 index and dragging it well below the 38,500 mark. Various sectors, particularly index heavyweights and the technology sector, were hit the hardest.
The Nikkei 225 Index fell by 388.59 points, equal to a 1.00 percent decrease, landing it at 38,446.51. This is a contrast to the previous trading session on Tuesday where Japanese stocks ended with sharp gains.
Major players like SoftBank Group and Uniqlo operator Fast Retailing took hits, with losses of more than 1 percent and 2 percent respectively. Automakers were also affected, with Honda and Toyota both down by approximately 2 percent.
The tech sector did not escape the downturn, with Advantest and Tokyo Electron dropping between 0.3 to 0.5 percent, while Screen Holdings lost close to 1 percent. Banking firms were also impacted, for example, Mizuho Financial slipped down 0.3 percent, while Mitsubishi UFJ Financial and Sumitomo Mitsui Financial recorded close to 1 percent loss each.
Among the main exporters, Canon fell by 0.4 percent and Sony lost almost 4 percent. Similarly, Panasonic and Mitsubishi Electric faced reductions of almost 1 percent each.
Stark losses were observed for Ricoh, which plunged more than 7 percent, and Nintendo, Nomura Holdings, and NEC, declining roughly 4 percent each. Dai-ichi Life and Fujikura, on the other hand, reported losses of more than 3 percent each, while Fujitsu, Fuji Electric, East Japan Railway, Nitori Holdings, and Credit Saison slipped almost 3 percent each.
Contrarily, Yokogawa Electric made considerable gains, surging more than 7 percent. Oriental Land, Socionext, and Sumitomo Pharma also saw increases of almost 3 percent each.
In currency news, the U.S. dollar traded at the lower end of the 155 yen range on Wednesday.
On Wall Street, modest strength was seen through most of Tuesday's trading session but it lost ground in afternoon trading ending the day with little to no change. The Dow still managed a fifth consecutive session of closing higher, its best closing level in a month.
The major indices ended the day narrowly mixed. The Nasdaq fell by 16.69 points or 0.1 percent to 16,332.56, while the Dow inched up 31.99 points or 0.1 percent to 38,884.26, and the S&P 500 ticked up 6.96 points or 0.1 percent to 5,187.70.
European markets recorded positive movements in their sessions. The German DAX Index surged by 1.4 percent, the U.K.'s FTSE 100 Index jumped by 1.2 percent, and the French CAC 40 Index advanced by 1.0 percent.
Crude oil prices slightly decreased on Tuesday due to concerns over the future of global oil demand. West Texas Intermediate Crude oil futures for June ended the session lower by $0.10 at $78.38 per barrel.