Japanese Shares Retreat from Record Peaks Ahead of US Data (Update 1)

Reuters

13:03 JST, July 5, 2024 (updated at 16:30 JST)

TOKYO, July 5 (Reuters) – Japan’s main stock indexes retreated from record highs touched during early trade on Friday, as investors locked in profits after a recent rally and positioned themselves ahead of key U.S. economic data due later in the day.

The benchmark Nikkei index closed flat at 40,912.37, but managed to post its best weekly performance since late March. The broader Topix finished 0.5% lower at 2,884.18.

With both the indexes reaching record figures, there’s a “sense of accomplishment” in the market, said Masahiro Ichikawa, chief market strategist at Sumitomo Mitsui DS Asset Management.

Analysts also pointed to some profit-taking in the wake of both indexes scaling record peaks, while a stronger yen also weighed on the market.

Japanese shares got a boost this year partly from corporate governance reforms, which fueled expectations that local companies will continue to increase returns.

A softer yen supported shares of export-related companies such as automakers in the first six months of the year, and an exit from the Bank of Japan’s ultra-easy monetary policy helped lift the banking sector.

“One key factor in whether or not stocks continue to rise will be corporate earnings results released from the latter part of this month,” Sumitomo Mitsui’s Ichikawa said.

Among individual stocks, automakers dragged on Friday, with Toyota Motor falling 2.1% and Honda Motor slipping 3.4% to be one of the worst performers.

Mitsui O.S.K. Lines tumbled 3.6% as the wider shipping sector underperformed.

Chip-related Advantest declined 2.1%, while peer Tokyo Electron rose 1.5%.

Uniqlo parent company Fast Retailing closed 0.7% higher.