(Bloomberg) — Japanese stocks are likely to extend losses on Thursday as a stronger yen weighs on the earnings outlook for exporters while bond yields look set to decline in a headwind for banks.
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Tech companies such as Hitachi and Tokyo Electron may be a drag on the Topix after the yen gained more than 1% overnight amid expectations the Federal Reserve will cut interest rates later this month.
Lenders including Mitsubishi UFJ Financial Group are likely to drop after the yield on the 10-year Treasury note fell eight basis points on signs of a slowdown in the US labor market. Japanese bond futures pointed to lower yields in Tokyo on Thursday.
“The Nikkei will likely start the day lower, with some mechanically reacting to the stronger yen,” said Takashi Ito, a senior strategist at Nomura Securities, adding that cyclical stocks will likely be sold off on concern over a slowdown.
CME futures on the Nikkei 225 Stock Average traded at 36,600 at 8:08 a.m. in Tokyo, compared with the underlying gauge’s close of 37,047.61 on Wednesday. Futures suggest the Nikkei 225 will fall 1.2%.
Investors will be watching shares of Nippon Steel after people familiar with the matter said US President Joe Biden is preparing to block the company’s $14.1 billion takeover of United States Steel.
Index compiler Nikkei on Wednesday said the Nikkei 225 added the Muji retail chain operator Ryohin Keikaku and Nomura Research Institute, replacing Nippon Paper Industries and DIC.
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