The Japanese stock market experienced a notable decline on Wednesday, shedding some of the gains made in the previous two sessions, amidst mixed signals from Wall Street overnight. The Nikkei 225 is significantly down, dropping below the 38,900 level, pressured by losses in exporters, automakers, and financial stocks. Traders are adopting a cautious stance ahead of the Bank of Japan's policy decision later this week.
As of the latest data, the benchmark Nikkei 225 Index has decreased by 285.85 points, or 0.73%, settling at 38,848.94, having touched a low of 38,809.36 earlier. This follows a modest increase in Japanese stocks on Tuesday.
In individual performances, market heavyweight SoftBank Group edged up by 0.2%, while Uniqlo operator Fast Retailing saw a decline of 2.5%. Within the automotive sector, Honda is down by 0.2% and Toyota has slipped by 1.5%.
In the technology sector, Advantest increased slightly by 0.4%, whereas Tokyo Electron and Screen Holdings both saw marginal declines of between 0.1% to 0.3%.
The banking sector is also under pressure, with Mizuho Financial, Mitsubishi UFJ Financial, and Sumitomo Mitsui Financial each dropping more than 1%.
Among major exporters, Canon and Panasonic both saw losses of nearly 1%, while Sony declined by approximately 3%. Mitsubishi Electric, however, inched up by 0.1%.
Significant losses were observed in Toho, which dropped nearly 6%, and both Japan Steel Works and Daiichi Sankyo, which fell by over 3% each. Recruit Holdings, Mitsubishi Estate, West Japan Railway, East Japan Railway, and Keyence all recorded declines of around 3%.
Conversely, TDK gained more than 4%, and Taiyo Yuden added nearly 3%.
In economic news, the Bank of Japan reported that producer prices in Japan increased by 0.7% in May, exceeding expectations of a 0.4% rise and following a revised 0.5% gain in April. On an annual basis, producer prices rose 2.4%, surpassing the forecasted 2.0% and accelerating from the revised 1.1% increase in the previous month.
The export price index inched up by 0.1% month-over-month, while the import price index rose by 0.9%.
In the currency market, the U.S. dollar is trading in the lower 157 yen range on Wednesday.
On Wall Street, stock indexes dipped in early trading on Tuesday but became mixed as the session progressed. The Nasdaq and the S&P 500 recovered from early setbacks to achieve new record closing highs, while the Dow improved from its lowest levels but remained in negative territory for the remainder of the day.
The Nasdaq surged by 151.07 points or 0.9% to 17,343.55, and the S&P 500 increased by 14.53 points or 0.3% to 5,375.32. Conversely, the Dow dropped by 120.62 points or 0.3% to 38,747.42.
In Europe, major markets also trended downward. The French CAC 40 Index plummeted by 1.3%, the U.K.'s FTSE 100 Index fell by 1.0%, and the German DAX Index decreased by 0.7%.
Crude oil prices saw a slight increase on Tuesday, as market caution prevailed ahead of upcoming inventory data and the Federal Reserve's monetary policy announcement. West Texas Intermediate crude oil futures for July rose by $0.16, closing at $77.90 per barrel.
