Japanese stocks fall amid weak chip sector, yen strength

(MENAFN) Japanese equities concluded Monday's trading session on a notably lower note, with chip-related stocks taking cues from their American counterparts and descending into negative territory. The Nikkei index bore the brunt of the downturn, plummeting by 2.19 percent to close at 38,820.49 points, marking its most significant decline since October 4. Shuji Hosui, chief strategist at Daiwa Securities, attributed this pronounced pullback to the retreat of chip stocks in the United States towards the end of the previous week, ushering the Nikkei into a corrective phase.

The setback in the Nasdaq and Standard & Poor's 500 indices on Friday, despite initially surging to record highs during the session, underscored the vulnerability of chip companies, which reversed course amidst robust gains. Hosoi noted that the prevailing strength of the yen further compounded the woes of Japanese stocks, particularly weighing on exporters' sentiment. He anticipates this trend to persist until the conclusion of the Bank of Japan's monetary policy meeting, as speculation regarding potential adjustments to interest rates looms large.

Against a backdrop of mounting speculation surrounding the Bank of Japan's policy stance, a growing contingent of policymakers are signaling openness to the notion of abandoning negative interest rates this month, buoyed by expectations of substantial wage hikes in the coming year. The yen's ascent against the dollar, fueled by speculation surrounding potential policy adjustments by the Bank of Japan, has exacerbated concerns among investors, amplifying the downward pressure on Japanese stocks.

Reflecting the broader downturn, Tokyo Electron, a prominent chip equipment manufacturer, witnessed a decline of 3.15 percent, while Advantest, a leading chip testing equipment maker, registered a substantial drop of 4.78 percent. These developments underscore the vulnerability of Japan's equity market to fluctuations in the global chip sector and currency dynamics, highlighting the intricate interplay of external factors shaping investor sentiment and market performance.

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