Japan's Nikkei slides as Wall Street losses, yen rally weigh
By Brigid Riley
TOKYO, July 24 (Reuters) -Japan's Nikkei share average fell during morning trade on Wednesday, dragged lower by a decline in U.S. stocks and a stronger yen.
The Nikkei .N225 slid 0.22% to 39,508.84 by the midday break, while the broader Topix .TOPX was down 0.37% at 2,822.91.
Wall Street ended slightly lower on Tuesday, while earnings from Alphabet GOOGL.O and Tesla TSLA.O, the first from the so-called Magnificent Seven stocks, failed to spur widespread enthusiasm.
Meanwhile, the yen continued to rally, hovering around 155.455 per dollar, as markets priced in a 56% chance of a rate hike in Japan next week and fears of currency intervention kept speculators at bay. FRX/
A stronger yen tends to hurt exporter shares as it decreases the value of overseas profits in yen terms when firms repatriate them to Japan.
The Nikkei briefly rebounded during trading as investors jumped in to buy stocks on the dip before slumping into negative territory again.
"Japanese equities are facing a double whammy of yen strength and caution in the tech space," said Charu Chanana, global market strategist and head of FX strategy at Saxo.
Traders will likely remain careful of testing the limits of yen weakness even if the Bank of Japan doesn't strike the hawkish note next week, she added.
"This means broader Japanese equities could face further headwinds, especially if Big Tech earnings fail to meet the massive expectations."
The benchmark index hit a record high of 42,426.77 on July 11 but has since suffered a string of losses as chip shares underperformed and the yen sharply appreciated from the 161 range. The Nikkei slid to a three-week low of 39,519.39 on Monday.
In individual stocks, Nidec 6594.T jumped 6.4% after the Japanese electric motor maker raised its full-year operating profit forecast on Tuesday off the back of a recovery in demand for hard drive motors, efforts to raise its profitability and a weaker yen.
Mitsubishi Motors 7211.T slid 8.8% on disappointing profits, becoming the worst percentage performer.
Reporting by Brigid Riley; Editing by Eileen Soreng
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