Japan’s Nikkei share average edged down on Thursday morning pressured by a pause in the weak yen trend, while mining shares firmed on gains in oil prices. The Nikkei dropped 0.2 percent to 19,175.10 in midmorning trade. The dollar slumped on Monday and hit Japanese equities after the U.S. House of Representatives pulled a bill to overhaul U.S. healthcare insurance, which knocked the wind out of the dollar-supportive “Trump trade.” The U.S. currency was up 0.1 percent at 111.195 yen, but far lower than a level above 115 yen hit a few weeks ago. “Investors have bought Japanese stocks mainly because of the strong dollar-yen trend. Trump’s healthcare defeat threw a wet blanket on the Japan market’s rally since last November,” said Takuya Takahashi, a strategist at Daiwa Securities.
Japanese stocks have soared more than 10 percent since Trump’s election on hopes his administration will boost U.S. economic growth to 3 percent or even higher. On Thursday, Japanese insurers and banks, which hunt for higher yield products, were weaker after U.S. Treasury debt yields slid on lingering uncertainty surrounding the Trump administration’s economic policies.
MS&AD Insurance dropped 0.6 percent, Mitsubishi UFJ Financial Group shed 0.5 percent and Mizuho Financial Group declined 0.8 percent. Analysts said that while investors focus on Trump’s economic stimulus policies, investors may pick up Japanese stocks with strong earnings prospects such as semiconductor equipment makers.
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On Thursday, Tokyo Electron rose 1.5 percent and Advantest Corp surged 1.9 percent. Also outperforming the market were mining stocks, with Inpex Corp rising 1.3 percent and Japan Petroleum Exploration Co gaining 0.5 percent after oil prices rose more than 2 percent on Wednesday.
Meanwhile, capital flows data showed that foreign investors remained net sellers of Japanese stocks for the week ending on March 25. Foreigners sold a net 754.3 billion yen worth of shares in the week through Mar. 25, after selling a net 585.3 billion yen in the week before that. The broader Topix declined 0.4 percent to 1,536.23 and the JPX-Nikkei Index 400 dropped 0.4 percent to 13,731.70.