The Nikkei 225 average had its best year-end close in 29 years Monday even though it dropped from Friday.
The benchmark index ended at 23,656.62, up 3,641.85 points, or 18.20 percent, from the 2018 closing.
The Topix, which covers all first-section issues on the Tokyo Stock Exchange, jumped 227.27 points, or 15.21 percent, to wrap up 2019 trading at 1,721.36.
But from Friday, the Nikkei plunged 181.10 points, or 0.76 percent, and the Topix sank 11.82 point, or 0.68 percent.
Stocks went south from the opening bell, weighed down by the yen’s strengthening against the dollar. Issues in the semiconductor and machinery sectors, in particular, met with heavy selling following a drop in the U.S. SOX Philadelphia semiconductor index on Friday.
The market also faced growing profit-taking and position-squaring pressures before the start of the six-day holiday, brokers said.
“Trading was thin throughout the day as there were not many participants,” said Tomoaki Fujii, head of the investment research division at Akatsuki Securities Inc.
Yutaka Miura, senior technical analyst at Mizuho Securities Co., said investors moved to the sell side to brace for possible drops in U.S. stocks during the holiday period in Japan.
Wall Street may drop if closely watched economic indicators, such as the U.S. Institute for Supply Management’s manufacturing index for December, due out Friday, fail to beat the market consensus, he noted.
Chihiro Ota, general manager for investment research and investor services at SMBC Nikko Securities Inc., said market players were also vigilant against a flash crash caused by an unscheduled event.
“The Tokyo market’s direction at the outset of the new year will be determined by developments in overseas markets during the holiday,” said Masahiro Ichikawa, senior strategist at Sumitomo Mitsui DS Asset Management Co.
On the first section, falling issues far outnumbered rising ones 1,541 to 542, while 78 issues were unchanged. Volume dropped to 796 million shares from 825 million Friday.
Among the losers in the semiconductor and machine sectors, wafer producer Shin-Etsu Chemical gave up 1.31 percent, chip test device manufacturer Advantest 1.91 percent and machinery maker Nabtesco 2.54 percent.
Mitsubishi UFJ and other mega-bank groups were pushed down by the poor performance of their U.S. peers.
Apparel store operator Adastria tumbled 6.74 percent due to its profit warning for the year ending February.
Also sold were air conditioner maker Daikin and soy sauce producer Kikkoman.
By contrast, Nitori rose 1.86 percent on an 8.3 percent rise in the furniture retailer’s operating profit for March-November.
Rental apartment developer Leopalace21 and credit card firm Credit Saison went higher as well.