Japan’s Nikkei index closes at a two-week low as a new fiscal year begins

On Monday, Japan’s Nikkei index experienced a notable downturn, closing at its lowest level in two weeks, dipping below the 40,000-point mark. This decline was primarily attributed to traders opting to sell stocks to secure profits on the first day of the country’s new fiscal year.

The Nikkei index recorded a 1.4 percent decrease, settling at 39,803.09 points, marking its lowest closing level since March 18, despite initially opening 0.7 percent higher. Similarly, the broader Topix index witnessed a decline of 1.71 percent, closing at 2,721.22 points.

According to Shoichi Arisawa, the general manager of investment research at Aiwaicosmo Securities, institutional investors typically engage in profit-taking activities on the first day of the fiscal year.

In 2024, the Nikkei index had experienced a remarkable 19 percent increase, surpassing the 40,000-point threshold and reaching record highs in March, following a steady ascent of 54 percent since early 2023.

Shares in chip-related companies, such as Tokyo Electron and Advantest, faced losses of 3.21 percent and 4.96 percent, respectively, while Toyota Motor witnessed a decline of 4.03 percent.

A survey conducted by the Bank of Japan revealed that optimism within the Japanese services sector surged to its highest level in 33 years during the first quarter, attributed to a booming tourism industry and increased profits resulting from rising prices.

Despite these positive indicators, strategic analysts noted that the survey results did not significantly impact the market as they were within expectations.

Shigetoshi Kamada, the general manager of research at Tachibana Securities, highlighted that the stability in the currency market provided minimal signals for local stocks. The yen, touching its lowest level in 34 years against the dollar at 151.975 yen on Wednesday, further declined to 151.35 per dollar in the latest trading.

Shares of heavy machinery manufacturers experienced notable declines, with Kawasaki Heavy Industries and Mitsubishi Heavy Industries witnessing drops of 6.36 percent and 4.5 percent, respectively. Nomura Holdings shares also fell by 5.41 percent.

However, amidst the downturn, watchmaker Citizen Watch’s stock surged by 5.05 percent, while calculator maker Casio Computer’s stock gained 4.94 percent, emerging as the top performers in the Nikkei index.