FX.co ★ Japanese Market Sharply Lower

The Japanese stock market experienced a significant decline on Wednesday, breaking a four-day winning streak influenced by negative trends from Wall Street the previous night. The Nikkei 225 fell sharply, dropping below the 39,300 mark, with widespread weakness across all sectors, notably among major index players and technology stocks.

By mid-day, the Nikkei 225 Index had decreased by 676.51 points, or 1.70%, landing at 39,234.04, after dipping to an early low of 39,062.85. This contrasts with the substantial gains observed in Japanese stocks the day before.

Among market heavyweights, SoftBank Group saw a decline of over 4%, while Fast Retailing, the parent company of Uniqlo, slipped by 0.2%. Within the automotive sector, Honda's stock remained unchanged, whereas Toyota saw a slight decrease of 0.4%.

In the technology sector, shares of Advantest fell nearly 2%, with Tokyo Electron plummeting over 10%, and Screen Holdings dropping almost 10%.

In the banking sector, Sumitomo Mitsui Financial slightly decreased by 0.1%, while both Mizuho Financial and Mitsubishi UFJ Financial showed minor gains ranging from 0.1% to 0.5%.

Major exporters also faced declines, with Panasonic and Canon both dropping between 0.3% and 0.4%, Sony falling by nearly 1%, and Mitsubishi Electric losing over 1%.

Several notable companies faced steep declines: Lasertec's shares plunged almost 14%, Disco's fell over 8%, and Isetan Mitsukoshi's dropped more than 6%. Socionext and Hoya decreased by over 5% each. Shiseido's stock slid nearly 5%, while Keyence and Ebara both lost nearly 4%. Renesas Electronics, Yaskawa Electric, Fuji Electric, and J. Front Retailing all saw declines exceeding 3%.

Conversely, Taisei and Obayashi both bucked the trend, each gaining more than 5%.

On the economic front, the Cabinet Office reported that Japan's core machine orders fell by a seasonally adjusted 1.9% month-on-month in August, amounting to 858.1 billion yen. This was below expectations of a 0.1% decline, similar to the previous month's figure. Annually, core machine orders decreased by 3.4%, missing the forecast for a 3.6% increase and significantly down from July's 8.7% rise. For Q3 2024, predictions suggest a quarterly increase of 0.2% and an annual rise of 3.9%, totaling 2,626.7 billion yen.

Meanwhile, the total value of machinery orders from 280 Japanese manufacturers reduced by 3.0% on a monthly basis but rose 15.5% year-over-year in August to 2,961.4 billion yen.

In the currency market, the U.S. dollar traded in the lower 149 yen range on Wednesday.

On Wall Street, stocks encountered heavy selling on Tuesday after an initial upward movement early in the session. Despite strong gains on Monday, major indices closed notably lower. The Nasdaq dropped 1.0%, or 187.10 points, to 18,315.59. The Dow decreased by 324.80 points, or 0.8%, settling at 42,740.42, and the S&P 500 slipped 44.59 points, or 0.8%, closing at 5,815.26.

European markets mirrored the downward trend. The French CAC 40 Index decreased by 1.1%, the UK's FTSE 100 Index fell by 0.5%, and the German DAX Index edged down 0.1%.

Crude oil prices fell sharply on Tuesday amid eased concerns over supply disruptions following reports that Israel would refrain from targeting Iran's oil infrastructure. West Texas Intermediate crude futures for November dropped by $3.25, or 4.4%, closing at $70.58 per barrel.