The Nikkei average dropped for the fourth straight session on the Tokyo Stock Exchange Wednesday as major component issues fell victim to profit-taking.
The 225-issue Nikkei average of the Tokyo Stock Exchange closed at 27,055.94, down 102.69 points, or 0.38%, after the benchmark index lost 99.75 points Tuesday.
The Topix index of all first section issues gained 4.96 points, or 0.28%, to finish at 1,796.18, snapping a three-day losing streak. The index inched down 3.37 points the previous day.
The Nikkei opened slightly below the previous day’s close despite an overnight rally in the U.S. market, weighed down by the yen’s strengthening against the dollar. But the key market gauge soon entered positive territory thanks to buying on dips prompted by better-than-expected U.S. manufacturing purchasing managers’ index for December, released overnight by the Institute for Supply Management.
The Nikkei succumbed to selling pressure from midmorning trade, however, as investors moved to sell heavily weighted components to lock in profits.
The increasing possibility of a Democratic sweep in the U.S. Senate runoff elections in the state of Georgia and the expected declaration of a state of emergency over the novel coronavirus in Japan on Thursday added to uncertainty capping the market’s topside, brokers said.
Major Nikkei components Fast Retailing, Tokyo Electron and Advantest were mainly responsible for the benchmark average’s slide, Maki Sawada, strategist of Nomura Securities Co., said. Although rising Nikkei component issues outnumbered falling ones, the index finished lower because of the heavyweights’ losses.
Other issues such as cyclicals were attracting buying on optimism for economic recovery from the coronavirus crisis through stimulus measures, Sawada added.
Hirohumi Yamamoto, strategist at Toyo Securities Co., said that potential Democratic victories in both Georgia runoff races “make it impossible for the market to have the best of respective policies pushed by the Democratic and Republican parties.”
The market had hoped that a victory by at least one Republican candidate would ensure the party’s control of the Senate and prevent corporate tax hikes, while the Democratic House of Representatives and presidency would pass a larger stimulus package.
On the TSE first section, gaining issues outnumbered falling ones 1,428 to 686 while 72 issues were unchanged. Volume increased to 1,179 million shares from Tuesday’s 989 million shares.
Fast Retailing fell 2.48%, succumbing to profit-taking after it posted a record intraday high on Monday.
Chipmaking gear maker Tokyo Electron and semiconductor test device manufacturer Advantest both lost ground after semiconductor names surged the day before.
On the other hand, energy names Inpex and Eneos advanced 6.17% and 4.03%, respectively, on the surge of the West Texas Intermediate crude oil futures.
Cyclicals such as shipping and machinery issues also gained, with Kawasaki Kisen gaining 5.49%.
In index futures trading on the Osaka Exchange, the key March contract on the Nikkei average lost 60 points to 27,010.
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