Japanese stocks fall to record lows
What’s happening: Japanese stocks ended Thursday’s trading session higher but sharply reversed gains this morning.
What happened: Chip stocks, which are important components of the Nikkei 225, remained volatile after bellwether Nvidia reported its fourth-quarter results.
Markets were supported by some weakness in the yen, while US tariff threats weighed on sentiment.
Tokyo Electron shares fell
Why it matters: Weakness in the yen supports Japanese exporters. A softer yen makes Japanese products more competitively priced in the international markets, boosting their demand. It also increases the earnings for Japanese exporters, as they receive a larger amount of their domestic currency without any change in prices in foreign currencies.
Market sentiment was also supported by billionaire investor Warren Buffett saying that his company Berkshire Hathaway has plans of increasing its stakes in Japanese stocks.
Yen's weakness supports Japanese exporters
Marine transport, trading and pharma stocks were the best gainers during Thursday’s session. Shares of Sompo Holdings rose 5.00%, Fujikura rose 4.81% and Itochu gained 4.34%.
However, investors responded to Nvidia’s results by abandoning chip stocks. Nasdaq-listed Nvidia, which is at the epicentre of the AI boom, delivered strong results but disappointed investors who were expecting another blockbuster quarter. Nvidia’s stock slid 8.5% on Thursday, the steepest single day decline in a month.
Japanese yen falling
Japan’s chip stocks mirrored the decline this morning. Shares of Tokyo Electron fell 5.6% and Advantest shed 9.8%. Socionext, which had climbed almost 13% on Thursday, tumbled 7.0% this morning.
Economic and geopolitical tensions in the US and China impacted investor sentiment. On Thursday, the US reported a deceleration in GDP growth in the fourth quarter and a surge in initial jobless claims in the week ending February 22.
The Nikkei 225 rose by 0.30% to settle at 38,256.17 on Thursday. The index was trading lower by 3.3% at 36,988.53 this morning.
What to watch: Investors will continue monitoring announcements by the Trump administration. Markets will also look out for any comments from Bank of Japan officials regarding a possible interest rate hike at the next policy meeting, scheduled for mid-March.