Tokyo stocks lost ground Monday, hit by selling to lock in gains from the resent market upsurge.
The benchmark 225-issue Nikkei average of the Tokyo Stock Exchange shed 203.80 points, or 0.76%, to close at 26,547.44, after dropping 58.13 points on Friday.
The Topix index of all first-section issues closed 15.19 points, or 0.86%, lower at 1,760.75 to snap its four-day winning streak through the previous trading day, when the broader index gained 0.69 point.
The Tokyo market opened higher, aided by all three major U.S. stock price gauges, including the Dow Jones Industrial Average, rewriting their all-time closing highs Friday on the back of expectations for an early coronavirus relief package deal.
But profit-taking soon took the upper hand amid growing investor concerns about an overheated market after the recent rally.
A drop in Dow futures in off-hours trading sent both the Nikkei and Topix indexes deeper into negative terrain in the afternoon, with the Nikkei giving up more than 250 points at one point.
Moves to “buy the dip” emerged in the afternoon. But the market failed to return to the positive side due to persistent profit-taking pressure.
U.S. stocks’ historic advance came after the announcement of weaker-than-expected nonfarm payroll growth in November swelled hopes for the virus relief package.
But buying of Tokyo stocks was short-lived because investors quickly realized that the dismal jobs data suggested the likelihood of a slowdown in the U.S. economy, an official at a midsized securities firm said.
Yutaka Miura, senior technical analyst at Mizuho Securities Co., pointed out that sentiment was also chilled by Washington’s reported preparation for imposing sanctions on several Chinese officials over their roles in disqualifying Hong Kong legislators.
“Market players reacted sensitively to the news because there had been no media reports about U.S. sanctions against China lately,” he said.
On the TSE’s first section, decliners outnumbered gainers 1,714 to 395 with 70 issues unchanged. Volume increased slightly to 1.166 billion shares from Friday’s 1.147 billion shares.
Furukawa Battery, which had surged as one of stocks related to electric vehicles, plummeted 20.20%, after the company denied production of batteries for drive motors for such vehicles.
Kansai Electric tumbled 4.07% in response to Osaka District Court’s ban on the restart of the No. 3 and No. 4 reactors at the power supplier’s Oi nuclear plant in central Japan.
Among other major losers were medical information provider M3 and clothing store chain Fast Retailing.
On the other hand, Toppan Printing rose 6.84%, thanks to the company’s announcement of a plan to buy back its own shares.
Also upbeat were game maker Konami and Daiwa House.
In index futures trading on the Osaka Exchange, the key December contract on the Nikkei average lost 210 points to end at 26,570.
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