Japan’s Nikkei falls to 3-week low, Yen strengthens

Japan's Nikkei share average experienced a dip to a nearly three-week low on Monday due to a strengthened yen affecting the earnings outlook for the exporters in the country, notably automakers.

Closing down by 0.6 per cent at 33,231.27, the Nikkei faced a significant slide, reaching 33,023.04 for the first time since November 14. The broader Topix also saw a decline of 0.83 per cent.

Among the Tokyo Stock Exchange's industry groups, transport equipment took the hardest hit with a 2.48 per cent decline, while mining followed closely with a 2.39 per cent slide, influenced by a substantial drop in crude prices affecting oil explorers.

The yen reached a nearly three-month high of 146.235 per dollar before easing back to around 146.65. Analysts noted that stock movements seemed influenced by currency market shifts.

Kazuo Kamitani, a strategist at Nomura Securities, commented on the situation, stating, "There's a strong impression that stocks are being pulled around by moves in currency markets." He also suggested that while yen strength might face challenges reaching 144 or 143 per dollar, this could be a near-term peak.

With the Nikkei's 25-day moving average showing a strong upward trend, Kamitani noted the possibility of the Nikkei pushing toward 34,000 with a positive driver.

On Monday, 170 of the Nikkei's 225 components fell, with Mazda being the worst-performing stock, dropping 3.93 per cent. Other major automakers like Nissan and Toyota also faced losses. Chip-making equipment giant Tokyo Electron and startup investor SoftBank Group were among the significant decliners.

In contrast, shipping emerged as the best-performing TSE industry group, climbing 1.95 per cent, while real estate was the only other sector with a notable gain, advancing by 0.45 per cent. The Nikkei had reached a 33-year peak on November 20 at 33,853.46.

(With Reuters inputs)