Japan's Nikkei retreats from 6-week high as investors lock in gains
Japan's Nikkei 225 retreated from a 6-week high on Friday, slipping 0.79% to 68,413.03 as investors locked in gains and turned cautious over the outlook for interest rates, inflation and geopolitical risks. The benchmark was still on track for a 3% advance on the week, while the broader Topix slipped 0.57% to 4,108.53.
The pullback followed a 3.3% surge on Thursday. In a note, Yuta Okamoto, an analyst at Tokai Tokyo Intelligence Laboratory, wrote that "concerns about short-term overheating are likely to lead to profit-taking," while adding that the outlook for domestic shares remains positive. He pointed to the Bank of Japan's tankan survey, released on Thursday, which showed sentiment among large manufacturers rose for a sixth straight quarter, and wrote: "It appears that expectations for a rise in Japanese share prices, based on earnings prospects, remain high".
In Japan, data showed core inflation in Tokyo accelerated in September at the fastest pace in 10 months, bolstering the case for further rate hikes. Elsewhere, US stocks ended higher overnight as Treasury yields retreated from multi-decade highs, though the tone remained choppy as investors focused on the Federal Reserve's rate trajectory and inflation risks. Geopolitical tensions also weighed, including the US-Iran war in the Middle East, alongside fresh disruptions to global energy markets after China suspended oil product exports beyond Hong Kong and Macau.
Market breadth was negative in Tokyo, with 53 advancers in the Nikkei 225 against 170 decliners and two unchanged. The largest losers were SoftBank Group, down 5.27%, followed by Taiyo Yuden, 4.98% lower, and Tokyo Electron, which lost 3.66%. The largest gainers were Furukawa Electric, up 6.25%, followed by Baycurrent, 6.04% higher, and Mitsui Kinzoku, which added 5.40%.
