Japanese stock exchange is adopting the bearish path

The Japanese stock market continued its decline today, Tuesday, as the Nikkei index closed lower, moving away from its six-month peak last week, at a time when the state of political uncertainty in the world led to the reluctance of investors to take risks and avoid selling stocks, according to Reuters.

The main index on the Japanese stock market, the Nikkei, lost 0.2%, to fall to 23,051.08 points, far from Friday's peak of 23338 points, and the highest level since late February.

The index closed the broader Topix in the Japanese stock exchange, down 0.06% to record 1610.85 points.

In the beginning of trading on shares on the Japanese stock exchange, the Nikkei benchmark index began on Tuesday without change.

Where the Nikkei started at 2,3097.80 points, while the broader Topix index fell 0.12% to 1607.87 points.

The yen's rise led to Japanese equity sales to take profits

The rise in the yen led to Japanese stock sales to profit-taking in a market curbed by already elevated values, escalating tensions between the United States and China, and doubts about US fiscal stimulus.

“The results season are gone and they haven't really supported the upward trend that we saw in the market, But the market was boosted by the rise in US stocks.” Said Masato Kojuri of Tokai Tokyo Securities.

Analysts at Okasan Securities said in a report that the net profits of Japanese companies listed on the Japanese Stock Exchange fell by more than 50% compared to a year ago in the most recent quarter, expecting that the profit growth will be limited to pharmaceutical and food companies in the fiscal year until next March.

Export companies were hurt by the yen's rise against the dollar

Japanese shares linked to the banking sector fell 1% with the decline in US bond yields, while export companies were affected by the rise of the yen against the dollar, including the automakers, whose shares rose earlier this month.

Mazda lost 2.3%, while auto components company DENSO lost 2.2%.

And government data, published yesterday, Monday, showed that the Japanese economy contracted during the second quarter of the current year by 27.8% on an annual basis compared to the previous quarter, due to the repercussions of the coronavirus pandemic, which is its worst contraction in 40 years.

This is a third consecutive quarter of negative growth, which means that the Japanese economy has entered a phase of recession and increases the chances that the government will resort to adopting more measures to stimulate the economy.

Exports of goods and services decreased by 18.5% between April and June, while imports decreased during the same period by only 0.5%, compared to a decline of 4.2% in the first quarter, according to Japan's "Kyodo" agency.

Although these numbers were slightly worse than expected, they are still much better than the declines in many other industrialized countries' economies, partly because the restrictions that Japan imposed on movement and trade to curb the spread of the epidemic were less severe than the restrictions. Imposed by those states.

The Japanese authorities declared a national emergency in April to curb the spread of the epidemic, but restrictions on movement and trade were much more flexible than those in many other countries.