Shares of Japanese Car and Chipmakers Surge as Yen Dips

Shares of Japan’s vehicle firms and microchip makers shot up on Thursday, benefitting from the yen’s plunge against the greenback to a 24-year low.

Higher than expected US inflation and concerns of further Fed interest rate lifts led the yen to drop to 138 to the dollar on Thursday morning. Those factors helped the Nikkei gain 0.62% by the close of the afternoon session.

It had opened 0.63% lower in the morning after overnight CPI data showed US inflation topped 9% in June, but quickly regained ground once the yen hit 138 to the dollar for the first time since 1998.

“It is possible the market had priced in a high CPI figure, or that it thinks this is the peak,” Nomura Securities strategist Maki Sawada said.

The broader Topix gained 0.23%.

US stocks were down overnight, but all three major indices managed to limit their losses after plummeting on the release of the CPI data. “There is a sense of relief that stocks didn’t collapse,” a market participant at a domestic securities firm said.

Semiconductor and electrical components companies led the Nikkei, tracking overnight gains made by the Philadelphia SE Semiconductor index. Keyence Corp added 3.48%, while Tokyo Electron Ltd added 3.33% and Fujikura Ltd rose 2.18%.

Suzuki Motor Corp gained 3.2% after announcing last night it would end its involvement in MotoGP in order to focus its resources on sustainability.

Fellow automaker Mazda Motor Corp was up 2.2%.

Uniqlo parent Fast Retailing, one of Nikkei’s most influential components, was up 1.5% ahead of today’s third-quarter earnings release. The company was forecast to report quarterly profit growth of 11%.

Utilities weighed heavily on the index, down 2.12% overall.

Tokyo Electric Power Company Holdings was the worst performer, plummeting 7.7%. On Wednesday, the Tokyo district court ordered four former executives to pay 13 trillion yen ($94 billion) in damages in a lawsuit brought by shareholders over the company’s handling of the Fukushima nuclear disaster.

Kansai Electric Power and Chubu Electric Power also made losses and were down 2.35% and 1.3%, respectively.