Japan’s Nikkei ends lower on profit-booking from Takaichi rally

TOKYO: Japan’s Nikkei share average finished more than 1% lower on Thursday, as investors booked profits from a rally driven by expectations for fiscal dove Sanae Takaichi’s new government.

The Nikkei declined 1.35% to 48,641.61 in its second straight session of falls. The broader Topix edged down 0.39% to 3,253.78.

“Investors had scooped up stocks ahead of the parliamentary vote to elect Takaichi as prime minister, and as soon as she was elected, they started a selloff as all the good news was priced in,” said Kazuaki Shimada, chief strategist at IwaiCosmo Securities.

Hardline conservative Takaichi was elected Japan’s first female prime minister on Tuesday, sending the Nikkei to a record intraday high of 49,945.95 on that day.

Sentiment was also hurt by concerns over the U.S.-China relationship after reports that the Trump administration was considering curbs on exports to China made with U.S. software.

“The news on the U.S.-China issues became a trigger for the selloff, but it was not a fundamental reason for today’s declines,” Shimada said.

Technology investor SoftBank Group lost 4.66% to become the biggest drag for the Nikkei. Chip-related Advantest and Tokyo Electron lost 3.71% and 3.25%, respectively.

Meanwhile, defence-related shares jumped, with Sumitomo Heavy Industries surging 11.26%. Kawasaki Heavy Industries and IHI rose 8.32% and 4.3%, respectively.

The shares rose on expectations that Japan may propose to boost defence spending as Takaichi and U.S. President Donald Trump are scheduled to hold a meeting next week, Shimada said.

Of the more than 1,600 stocks trading on the Tokyo Stock Exchange’s prime market, 59% rose, 37% fell and 3% traded flat.