Nikkei falls as stronger yen weighs on exporters

(Updates at 0230 GMT) TOKYO, Aug 26 (Reuters) - Japan’s Nikkei share average fell on Monday after two straight sessions of gains, as exporters including chip-related and auto firms lost ground due to a stronger yen. The Nikkei (.N225) fell 1.09% to 37,944.68 by the midday break. “In addition to the yen’s strength, there are some factors that make investors hesitant to make positive bets. In a very short term, that’s Nvidia’s (NVDA.O) outlook this week,” said Shuutarou Yasuda, a market analyst at Tokai Tokyo Intelligence Laboratory. Chipmaker Nvidia’s (NVDA.O) blistering run has powered equity markets throughout 2024, and its earnings and forecast could be a key inflection point for market sentiment heading into what is historically a volatile time of the year. The yen rose to a three-week high against the dollar as U.S. Federal Reserve Chair Jerome Powell’s emphatic dovish shift contrasted sharply with Bank of Japan chief Kazuo Ueda’s steadfastly hawkish tone. (FRX/) “Fed rate cuts are positive for stocks but those are already priced in, while the BOJ is trying to raise rates from now. The gap in their policies weighs on the stock market,” Yasuda said. Ueda on Friday reaffirmed his resolve to raise rates if inflation stayed on course to sustainably hit the 2% target, suggesting recent market volatility would not derail the long-term rate hike plan. Heavyweight chip-related shares fell despite a 2.79% gain in the U.S. semiconductor index (.SOX) on Friday. Advantest (6857.T) slipped 2.96% and Tokyo Electron (8035.T) lost 2.14%. Auto (.ITEQP.T) fell 2.94% to become the worst performing sector among the Tokyo Stock Exchange’s 33 industry sub-indexes. The yen and stocks typically move in opposite directions, since a stronger domestic currency hurts exporters’ competitiveness and also makes stocks more expensive for foreigners. The broader Topix (.TOPX) fell 1.13% to 2,654.33, with Toyota Motor (7203.T) declining 3% to drag the index the most. Furniture and kitchen goods retailer Nitori Holdings (9843.T) rose 3.39%. Frozen food maker Nichirei (2871.T) climbed 2.33%.