Japan's Nikkei hits 3-month low as Yen strengthens

Japan's Nikkei share average closed at a three-month low on Thursday, experiencing its biggest daily decline in three years as the yen strengthened against major currencies, negatively impacting investor sentiment.

The Nikkei fell 3.28 per cent to close at 37,869.51, marking its lowest close since April 25. This decline extended the index's losing streak to seven days, the longest since October 2021, and represented the largest daily drop since June 2021. The broader Topix index also slipped, falling 2.98 per cent to 2,709.86.

The yen reached its strongest level against the dollar in 2.5 months and hit multi-month highs against other currencies ahead of the Bank of Japan (BOJ) meeting next week. A stronger yen typically hurts exporter shares by reducing the value of overseas profits when converted back to yen.

"The market turned cautious about the yen's gain against the dollar and other major currencies. That hurt investor sentiment," said Yugo Tsuboi, chief strategist at Daiwa Securities. He also noted that concerns about a US economic slowdown had negatively affected Wall Street overnight.

Technology investor SoftBank Group dropped 9.39 per cent, dragging the Nikkei down significantly. Chip-related shares followed their US counterparts, with Tokyo Electron and Advantest declining 4.82 per cent and 6.04 per cent, respectively. Renesas Electronics slumped 13.62 per cent after reporting a 29 per cent decline in net profit for the six months ending in June. Nissan Motor also fell, dropping 6.98 per cent, as the automaker saw its first-quarter profit nearly wiped out and slashed its annual outlook.

Despite the overall downturn, food-related shares rose, with beer brewer Sapporo Holdings gaining 3.23 per cent, making it the top performer on the Nikkei, and frozen-food maker Nichirei rising 3.13 per cent. Among the Tokyo Stock Exchange's 33 industry sub-indexes, all but three fell. The airline sector inched up 0.57 per cent, making it the top-performing sector.

(With Reuters inputs)