yen's slide lifts nikkei, but bank stocks stumble: what's next?

2025-05-02 general

tokyo, Friday, 2 May 2025.
tokyo’s nikkei average climbed 0.7% to close at 36,705 yen. the weaker yen, spurred by the bank of japan’s latest moves, boosted export giants, especially car manufacturers. conversely, banking shares faced a sell-off. investors are now warily eyeing whether the yen’s depreciation can last. the market also worries about a potential slowdown in japan’s economy. a weaker economy might hurt semiconductor demand, shaking up related stock valuations.

market movement

The Nikkei’s rise aligns with broader market activity. The index reached 36,898.74 by the afternoon, gaining 1.22%, or 446.44 yen [3]. This surge follows a prior day’s increase of 406.92 yen, closing at 36,452.30 [5]. The morning session saw the Nikkei open at 36,636.55, peaking at 36,976.51 before settling slightly [3]. These fluctuations reflect ongoing market adjustments to the yen’s movement and global economic cues [1].

yen’s influence and sector impacts

The yen’s exchange rate significantly influences the Japanese stock market. A weaker yen typically benefits exporters by making their products more competitive overseas [1]. Automakers, in particular, experienced increased buying interest [1]. Conversely, sectors anticipating gains from higher domestic interest rates, such as banking, faced selling pressure [1]. These dynamics illustrate the intricate relationship between monetary policy, currency values, and sector-specific stock performance [GPT].

intraday dynamics

During the trading day, the Nikkei experienced a lull in its ascent, hovering around 36,700 yen, a gain of about 290 yen [2]. This plateau occurred despite positive signals from the second round of U.S.-Japan tariff negotiations and rising U.S. stock futures [2]. Investors seemed to be taking profits, creating resistance to further gains [2]. The yen’s afternoon stabilization after weakening to 145 yen against the dollar also tempered the stock market’s upward momentum [2].

factors driving the market

Several factors contributed to market sentiment. Anticipation of progress in U.S. tariff policies initially boosted the Nikkei, mirroring gains in U.S. stocks [5]. However, profit-taking and concerns about the sustainability of the weaker yen created a more cautious trading environment [2]. Investor focus is now shifting towards evaluating corporate earnings reports to gauge the actual impact of these economic factors [5].

key stocks and contributors

Individual stocks significantly influenced the Nikkei’s performance. Fast Retailing, Daikin, and Shin-Etsu Chemical notably contributed to the index’s rise [2]. Conversely, Advantest and TDK experienced declines [2]. Fast Retailing’s stock price was 47,800, contributing +59.07 to the index [7]. Daikin contributed +29.44 with a stock price of 17,335 [7]. TDK, on the other hand, negatively impacted the index by -7.98, with its stock at 1,564.0 [7].

volume and prime market activity

Trading volume on the Tokyo Stock Exchange’s Prime Market remained robust. As of early afternoon, the estimated turnover reached 2.5736 trillion yen with 1.07168 billion shares traded [2]. A basket trade involving large investors accounted for approximately 11.4 billion yen [2]. The broader TOPIX index also saw gains, closing up 0.63% at 2667.29 [5]. These figures suggest sustained investor engagement amid ongoing market adjustments [2][5].

Bronnen

nikkei average weaker yen