Japanese stocks see major drop amid weak chip sector, stronger yen

(MENAFN) Japanese stocks faced a notable downturn as trading concluded on Monday, with chip-related stocks mirroring their American counterparts in a downward trend. The Nikkei index experienced a sharp decline of 2.19 percent, closing at 38,820.49 points, marking its most significant drop since October 4. Analysts attributed this substantial decrease to the correction phase initiated by the weakening performance of chip stocks in the United States.

Shuji Hosui, the chief strategist at Daiwa Securities, emphasized the influence of the US market dynamics on the Nikkei index, particularly citing the downturn in chip stocks towards the end of the previous week. This trend, coupled with the strength of the yen, has notably dampened the sentiment among exporters, further exacerbating the decline in Japanese stocks.

The Nasdaq and Standard & Poor's 500 indices also closed lower at the conclusion of Friday's session, despite initially reaching record high levels earlier in the day. The reversal in the direction of chip company shares, following significant gains, contributed to the overall negative sentiment in the US market.

Hosui further underscored the impact of the robust yen on Japanese equities, noting that this trend is expected to persist until the conclusion of the Bank of Japan's monetary policy meeting. There is growing speculation among policymakers at the Bank of Japan regarding the possibility of abandoning negative interest rates this month, amidst anticipations of considerable wage increases throughout the year.

The evolving stance of the Bank of Japan and the anticipated policy decisions are likely to play a significant role in shaping market dynamics in the upcoming sessions. The intersection of global market trends and domestic monetary policy considerations continues to influence investor sentiment and market performance in Japan.

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