Nikkei Slips as Stronger Yen Weighs, Market Lacks Clear Direction
The Tokyo Stock Exchange
TOKYO, May 27 (Reuters) – Japan's Nikkei share average dropped on Tuesday, pressured by a stronger yen that dampened sentiment, while most investors refrained from active trading amid a lack of clear market-moving catalysts.
The Nikkei was down 0.24% at 37,440.32 by the midday break. The broader Topix held its ground at 2,752.87.
'With the U.S. markets closed on Monday, institutional investors stayed cautious and quiet. And it looked like only individual investors were trading small stocks,' said Naoki Fujiwara, senior fund manager at Shinkin Asset Management.
'But the market reacted to the yen's gain against the dollar during the session,' said Fujiwara.
The yen strengthened against the dollar following comments from Bank of Japan Governor Kazuo Ueda, which signaled the central bank's willingness to raise interest rates.
Governor Ueda said that the BOJ must remain vigilant to the risk that rising food prices could drive underlying inflation higher, noting that it is already close to the central bank's 2% target.
A stronger yen generally pressures exporter shares, as it diminishes the value of overseas earnings when converted back into Japanese currency.
Among individual stocks, chip-making equipment maker Tokyo Electron fell 1.69% to drag the Nikkei the most. Uniqlo-brand owner Fast Retailing lost 0.78% and toy maker Konami Group slipped 1%.
Shares of staffing agency Recruit Holdings rose 1.37%, while game maker Nintendo also advanced, gaining 0.84%.
Drugstore operator Tsuruha Holdings climbed 1.51% after shareholders approved its merger with Welcia Holdings, despite opposition from U.K.-based fund Orbis Investment.
On the Tokyo Stock Exchange's prime market, 58% of the over 1,600 listed stocks advanced, 36% declined, and 5% remained unchanged.
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