Tokyo stocks dropped back Friday, pressured by selling to lock in gains after the recent bull run.
The 225-issue Nikkei average of the Tokyo Stock Exchange fell 179.08 points, or 0.62%, to close at 28,519.18, scoring the first drop in six trading days. The benchmark index gained 241.67 points Thursday.
The Topix index of all first section issues ended 16.67 points, or 0.89%, lower at 1,856.61 to snap its six-day winning streak, after rising 8.88 points the previous day.
The market opened higher supported by bullish buying of semiconductor stocks. But it soon fell into negative terrain as investors moved to realize gains from the recent rally, in which the Nikkei advanced more than 1,600 points.
U.S. President-elect Joe Biden’s announcement of a $1.9 trillion coronavirus relief package left investors with no buying incentives for now, brokers said.
A sense of market overheating has become strong since the Nikkei’s divergence above its 25-day moving average widened to an extent seen during the bull run in November last year, they added.
In the afternoon, stocks sank deeper, also weighed on by a drop in U.S. Dow Jones Industrial Average futures in off-hours trading and position-squaring selling ahead of the weekend.
Masahiro Ichikawa, chief market strategist at Sumitomo Mitsui DS Asset Management Co., said the Biden stimulus failed to lead to stock buying because “it had already been factored in” thanks to advance media reports.
“Market interest has shifted from how large the package would be to how quickly it can pass Congress,” said Maki Sawada, strategist of Nomura Securities Co.
Sawada also said market attention is particularly focused on whether the coronavirus relief program can be passed by March as envisaged by Biden.
On the TSE first section, decliners overwhelmed gainers 1,652 to 486 while 51 issues were unchanged. Volume fell to 1.249 billion shares from Thursday’s 1.413 billion shares.
Honda and Toyota soured 2.88% and 1.65%, respectively, on new reports that the automakers halted production in Malaysia due to reimplementation of lockdown measures.
Fast Retailing succumbed to profit-taking despite the clothing store chain’s September-November earnings beating market consensuses.
Game-maker Nexon and auto parts supplier Denso also sank.
On the other hand, stocks in the semiconductor sector surged after Taiwan’s TSMC, the world’s leading chip foundry, released plans to boost capital investments. Among them, chipmaking gear-maker Tokyo Electron went up 3.91% and test device manufacturer Advantest 2.76%.
Other winners included precision equipment manufacturer Canon and drugmaker Chugai.
In index futures trading on the Osaka Exchange, the key March contract on the Nikkei average fell 350 points to end at 28,460.
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