Japan's Nikkei Stock Average Shares End Lower on Caution over US Economic Outlook
Yomiuri Shimbun file photo
The Tokyo Stock Exchange
TOKYO, June 5 (Reuters) – Japanese shares ended lower on Thursday, with automakers leading the declines, as weak U.S. economic data fueled caution toward the outlook of the world's largest economy.
The Nikkei closed 0.51% lower at 37,554.49, while the broader Topix lost 1.03% to 2,756.47.
Overnight, U.S. data showed the smallest gain in private payrolls since March 2023 while the service sector contracted for the first time in about a year.
'The market had not expected to see the weak data out of the U.S., so now investors have become cautious about Friday's employment report,' said Shuutarou Yasuda, a market analyst at Tokai Tokyo Intelligence Laboratory.
'But the weak economic data means the Federal Reserve may lower interest rates, which is positive for equities. So investors do not have to switch to risk-off mode,' Yasuda said.
Shares of Suzuki Motor dropped 3% after a Reuters report revealed the automaker had suspended production of its Swift model, citing disruptions tied to China's rare-earth export restrictions.
Toyota Motor and Honda Motor fell 2.72% and 2.67%, respectively, pressured by the yen's overnight gain against the dollar.
Overall, automakers and auto parts makers fell 4.66%.
The dollar weakened across the board overnight, sending the yen as high as 142.6. The yen was last down 0.3% at 143.185.
A stronger Japanese currency tends to hurt shares of exporters, as it decreases the value of overseas profit in yen terms when repatriated to Japan.
Bank shares fell as U.S. Treasury yields declined overnight, with Mitsubishi UFJ Financial Group and Sumitomo Mitsui Financial Group slipping 1.39% and 0.93%, respectively.
Chip-related heavyweights rose to track overnight gains in the technology-heavy Nasdaq Composite.
Advantest jumped 4.57% and Tokyo Electron rose 3.78%, providing the biggest support to the Nikkei.
Of more than 1,600 stocks trading on the Tokyo Stock Exchange's prime market, 34% rose, 61% declined and 4% were flat.
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