FX.co ★ Japanese Shares Drop as Yen Strengthens

The Nikkei 225 Index fell by 1.4%, dipping below the 53,100 mark, while the broader Topix Index decreased by 1.8% to 3,565 on Monday. This decline continued the losses from the previous week as the yen strengthened amidst concerns about a potential joint intervention by Tokyo and Washington to support the currency. This currency shift was spurred by reports that the New York Federal Reserve had assessed dollar/yen levels with dealers on Friday, coupled with remarks from Prime Minister Sanae Takaichi on Sunday indicating that her administration would take necessary actions to address speculative market movements. A stronger yen negatively impacts the earnings outlook for Japan’s export-heavy industries and increases the cost of Japanese assets for foreign investors. Export-centric stocks were at the forefront of the decline, with Toyota Motor decreasing by 3.9%, Sony Group dropping 2.2%, and Fast Retailing falling 1.8%. Financial and technology sectors were also impacted, with Sumitomo Mitsui declining by 2.4% and SoftBank Group dropping 4.2%.