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TOKYO (Reuters) – Japan’s Nikkei share average slipped more than 1% on the first trading day of 2025 on Monday as investors sold stocks after the index’s year-end rally, overshadowing gains in chip-related stocks.
The Nikkei fell 1.47% to 39,307.05 after opening 0.13% higher. The index gained 4.4% in December, its biggest monthly gain since February last year.
“The Nikkei fell after rallying at the end of last year when overseas investors were absent. But the index is at a neutral level at around 39,400,” said Shigetoshi Kamada, general manager at the research department at Tachibana Securities.
The Nikkei’s losses will be limited for some time with demand from retail investors adding stocks to their tax-free stock investment program known as NISA, or the Nippon Individual Savings Account, Kamada said.
“Whether the index will go up or down depends on overseas stocks’ direction.”
Uniqlo-brand owner Fast Retailing dropped 4.22% to drag the index the most. Staffing agency Recruit Holdings slid 3.32%.
The broader Topix fell 1.02% to 2,756.38, led by Toyota Motor’s 4.29% decline.
Caution over Toyota’s December gains outweighed optimism for the company’s outlook supported by a weaker yen, Kamada said.
Toyota rose 23% last month, while Topix gained 3.9%.
Nippon Steel snapped five straight sessions of gains to fall 0.75% after U.S. President Joe Biden blocked its proposed $14.9 billion acquisition of U.S. Steel.
Chip-related shares rose, tracking Wall Street’s strong finish on Friday, with Advantest rising 1.13% and Tokyo Electron gaining 0.72% to become the biggest support for the Nikkei.
Of the Nikkei’s 225 components, 49 stocks rose, 175 fell and one traded flat.
