Japan’s Nikkei falls as August rally spurs profit taking

TOKYO: Japan’s Nikkei share average fell on Friday as August’s rally invited profit taking on the final trading day of the month, while a stronger yen and some weak economic readings also weighed on sentiment.

The tech-heavy Nikkei dropped 0.4% to 42,642.97 as of the midday break.

That put it on course to be flat for the week, but up 3.8% this month.

The index hit a record high of 43,876.42 on Tuesday of last week.

Meanwhile, the broader Topix sank 0.5% to 3,073.95, putting it down 0.9% for the week, but up 4.5% this month, when it also climbed to an all-time peak.

Japanese stocks have been buoyed in recent weeks by robust corporate earnings, as well as riding the global equities momentum spurred by Wall Street’s record run.

“This is an environment that is conducive to profit taking in Japanese stocks,” said Nomura strategist Maki Sawada, pointing to the strong gains for August and Friday being the final trading day of the month.

The bullish outlook from strong corporate earnings “hasn’t changed, and will continue to support the Nikkei” into September, she said. Figures on Friday showed factory output fell more than expected last month, while retail sales rose only slightly, falling short of forecasts.

Automakers were overall weaker as the yen’s gains against the dollar overnight reduced the value of overseas revenues. Toyota lost 1.5% and Honda eased 1.2%.

Chip-sector shares also declined, with Tokyo Electron sliding 1.5%.

Sony sank 1.8% and Nintendo dropped 1.3%.

Of the Nikkei’s 225 components, 147 fell versus 77 that rose, with one trading flat.