FX.co ★ Japanese Shares Track Wall Street Lower

On Thursday, the Nikkei 225 Index experienced a decline of 0.8%, settling around 37,000, while the broader Topix Index fell 0.5% to 2,720. Japanese equities reached a two-week low, echoing a significant sell-off on Wall Street from the previous night. This decline in US markets was driven by concerns over rising Treasury yields, sparked by fears that a recent legislative proposal could exacerbate the federal deficit.

Domestically, Japan witnessed a surprise jump in core machinery orders—a critical predictor of capital investment—which soared by 13% in March, a stark contrast to predictions of a 1.6% decrease. However, this positive data was overshadowed by other economic challenges: the manufacturing sector remained in a contraction phase as of May, and the expansion of the services sector decelerated.

The technology sector bore the brunt of the downturn, with significant drops in companies such as Disco (-1.9%), Advantest (-2.6%), and Tokyo Electron (-2.8%). The weakness permeated other major industrials and automotive sectors as well, affecting firms like Mitsubishi Heavy (-2.7%), Fujikura (-2.9%), and Toyota Motor (-1.3%).