TOKYO: Japan’s Nikkei share average slumped on Friday, erasing its gains for the week, as chip-sector shares tumbled in line with US peers.
The Nikkei lost 1% to 35,874.82 as of 0148 GMT, putting it on course to snap a two-week winning streak with a 0.28% slide.
It had entered the day up 0.76% for the week. Profit-taking ahead of the weekend also exacerbated declines, with technical indicators still suggesting the rally that took the Nikkei to a 34-year high at 36,984.51 on Tuesday was too fast.
The benchmark index still sits about 3.6% above its 25-day moving average.
The Tuesday peak coincides with the Bank of Japan’s decision to leave stimulus settings unchanged, but hawkish hints from the central bank chief in the post-meeting news conference have weighed on the market over the latter part of the week.
Even so, the Nikkei’s 7.24% climb this year eclipses all its major rivals, including the US S&P 500, which closed at record highs for three consecutive sessions to take its 2024 gains to 2.61% “Investors are still very conscious of a sense of overheating in the market,” said Maki Sawada, a strategist at Nomura Securities.
At the same time, breaks below the psychological 36,000-level for the Nikkei are attracting dip buyers, Sawada added.
Japan’s Nikkei eases on profit-taking, hawkish BOJ tilt
“The bottom looks quite firm,” she said. Chip-industry heavyweights Advantest and Tokyo Electron were the biggest drags on the Nikkei, followed by AI-focused startup investor SoftBank Group.
Shares in the companies sagged 4.65%, 2.25% and 1.69%, each.
The benchmark’s biggest percentage decliners were also chip shares, with Renesas dropping 6.9% and silicon maker Sumco off 5.06%.
That follows a plunge of some 10% for Intel in after-hours trading, after revenue forecasts fell short of analysts’ estimates.
The Philadephia SE Semiconductor Index had already posted a 0.25% drop for Thursday, despite Wall Street’s Big Three indexes all gaining.
Next week sees a pickup in the Japanese earnings season, with close to 500 companies reporting before a peak in mid-February.
In the US too, Apple, Microsoft , Amazon, Alphabet and Meta Platforms all announce financial results.
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