TOKYO: Japan’s Nikkei fell on Friday on profit-booking ahead of a long weekend, with reports after the close that the Komeito party would leave the ruling coalition, renewing political uncertainty.
The Nikkei fell 1.01 percent to 48,088.8, but still notched its best week in more than a year, rising 5 percent, helped by a sharp jump in Uniqlo brand owner Fast Retailing.
The broader Topix slipped 1.85 percent to 3,197,59.
After the market closed, Japan’s local media reported that the Komeito party will leave the ruling coalition with the LDP, casting uncertainty over the LDP’s ability to govern as Sanae Takaichi takes over the party.
The Nikkei jumped this week, after Takaichi won the party’s leadership election and placed on course to become the next prime minister, boosting expectations of renewed fiscal stimulus and loose monetary policy.
“It was natural that investors wanted to book profits after the sharp rally,” Tokai Tokyo Intelligence Laboratory market analyst Shuutarou Yasuda said.
“But worries that whether Takaichi can successfully secure coalition partners are growing. The stocks rose on expectations of Takaichi’s fiscal spending, but if the Liberal Democratic Party (LDP) can not form a solid coalition, Takaichi’s plans may not go ahead.”