Japan’s Nikkei Posts First Weekly Drop in Six on Profit-Taking, BOJ Bets (UPDATE 1)

Reuters

13:43 JST, March 8, 2024 (updated at 16:20 JST)

TOKYO, March 8 (Reuters) – Japan’s Nikkei share average rose on Friday but ended the week lower for the first time in six weeks due to profit-taking, while rising bets of the central bank exiting its ultra-loose monetary policy as soon as this month also weighed on sentiment.

The Nikkei closed up 0.2% at 39,688.94, down from an intra-day high of 39,989.33.

The index ended 0.6% lower for the week, following five straight weekly gains, when the benchmark soared past its 1989 record high, buoyed by corporate government reforms and strong foreign inflows.

Momentum slowed after the index crossed the 40,000 level for the first time ever on Monday on profit-taking and the yen strengthening on speculation that the Bank of Japan (BOJ) could normalize policy at its March 18-19 meeting.

Automobile firms slid on Friday on a strong yen, with index heavyweight Toyota Motor falling 1.4%, Subaru down 3.2%, and Suzuki Motor declining 2.1%.

The Japanese currency is up 1.5% on the week, its strongest jump this year against the dollar.

Traders were making some corrections in exporter stocks as they prepared for the BOJ’s meeting, Nomura chief macro strategist Naka Matsuzawa said.

“Investors don’t know how much of a rebound (in yen) will come after the policy change, so they don’t get side-lined.”

A weaker yen makes Japanese exports more competitive and boosts the value of overseas revenue.

Banks, meanwhile, were up 2.1%. The sub-index posted its best weekly jump since September of 6%, as bets of an imminent exit from the BOJ’s ultra-loose policy ramped up.

Heavyweight tech-related shares ended lower, after rallying in the morning session. Chip-making equipment giant Tokyo Electron was up just 0.8%, while chip-testing equipment maker Advantest fell 0.6%.

The broader Topix closed 0.3% higher at 2726.80 and posted a weekly gain of 0.6%.