TOKYO: Japan’s Nikkei share average was on track for a third consecutive day of losses on Wednesday, as tensions in the Middle East continued to weigh on sentiment and investors took profit before Japan’s earnings season kicks into high gear.
Although the benchmark index started the day in positive territory, rebounding from Tuesday’s eight-week low, caution quickly took hold.
The Nikkei was down 0.2% at 38,404.45 by the midday break.
The broader Topix was down 0.6% at 2681.54.
Uncertainty on how the situation in the Middle East will unfold has weighed on sentiment this week as geopolitical tensions between Iran and Israel rise.
At the same time, investors may be cautious as Japan’s earning season heats up, analysts said, with key companies such as chip-testing equipment maker Advantest due to report next week.
“We see some market weakness this season” as companies publish guidance for the new fiscal year, leading to some profit-taking ahead of earnings, said Kenji Abe, an analyst at Daiwa Securities.
The index will likely stay pinned in the 38,000-point range in the near term, he added.
US stocks were mixed overnight as Treasury yields continued to climb, giving the Nikkei little support.
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Federal Reserve Chair Jerome Powell said on Tuesday that monetary policy needs to be restrictive for longer, further dashing hopes of significant interest rate cuts this year.
Losses were widespread in the morning session, with only 63 of the Nikkei’s 225 constituents climbing, and many index heavyweights dragged.
Among individual stocks, Advantest was down 1.4%, while telecommunications company KDDI fell 1.1%.
Sony Group Corp declined 2.3%.
Fanuc Corp, which makes factory automation machinery, fell 2%.
Meanwhile, Resonac Holdings jumped 14.2% after the chemical company raised its revenue forecast for 2024. So far, the Nikkei is up 15% for the year.
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