Nikkei Falls for Sixth Straight Session as U.S. Tech Earnings and Yen Rally Weigh

The Nikkei share average in Japan closed lower for a sixth consecutive session on Wednesday, as mixed earnings from major U.S. tech firms and the yen’s continued rally weighed on the market. The Nikkei fell 1.11% to a one-month closing low of 39,154.85, marking its longest losing streak since October 2021. The broader Topix also slid 1.42% to 2,793.12.

Wall Street had ended slightly lower on Tuesday as investors awaited earnings from Alphabet and Tesla. While Alphabet beat second-quarter earnings estimates, Tesla reported its lowest profit margin in more than five years and missed estimates. Meanwhile, the yen rallied to a seven-week high of 154.36 per dollar on Wednesday as markets priced in a 56% chance of a rate hike at the Bank of Japan’s upcoming monetary policy meeting.

The stronger yen tends to hurt exporter shares, as it decreases the value of overseas profits when repatriated to Japan. Traders are cautious about testing the limits of yen weakness, even if the Bank of Japan doesn’t strike a hawkish note. This could continue to weigh on Japanese equities, especially if Big Tech earnings fail to meet expectations.

As the U.S. Federal Reserve and Japan’s earnings season approach, investors are keeping a close eye on market developments. Uniqlo parent Fast Retailing, chip-making giant Tokyo Electron, and silicon wafer maker Shin-Etsu Chemical were among the biggest drags on the Nikkei. Nidec, on the other hand, saw a 6.1% jump after raising its full-year operating profit forecast.

Mitsubishi Motors was the worst percentage performer, sliding 7.4% on disappointing profits. Overall, the Nikkei, which reached a record high on July 11, has since faced losses due to underperforming chip shares and the sharp appreciation of the yen from the 161 range.

Investors are awaiting the outcome of the upcoming central bank meetings and earnings reports, which could further impact the market in the coming days.