Japan’s Nikkei 225 experienced a decline from a six-week peak on Friday, as investors opted to secure profits and adopted a more cautious stance regarding the future of interest rates, inflation, and geopolitical uncertainties. The benchmark Nikkei declined by 0.94 percent, concluding at 68,309.46, thereby reducing its weekly gain to 2.9 percent. The broader Topix declined approximately 1 percent to 4,091.00. US stocks concluded the session with gains as Treasury yields pulled back from their multi-decade peaks. However, the market’s overall sentiment remained volatile, with investors closely monitoring the Federal Reserve’s interest rate path and the associated inflation risks.
In Japan, data indicated that core inflation in Tokyo surged in September at the most rapid rate in 10 months, strengthening the argument for additional rate increases. Geopolitical tensions exerted pressure, particularly with the US-Iran conflict in the Middle East and new disturbances in global energy markets following China’s suspension of oil product exports beyond Hong Kong and Macau. Following the Nikkei’s 3.3 percent surge on Thursday, “concerns about short-term overheating are likely to lead to profit-taking,” as noted by Yuta Okamoto.
Even so, the outlook for domestic shares remains positive, bolstered by the Bank of Japan’s tankan survey released on Thursday, which indicated that sentiment among large manufacturers rose for a sixth consecutive quarter. “It appears that expectations for a rise in Japanese share prices, based on earnings prospects, remain high,” Okamoto wrote. In the Nikkei 225, the number of decliners surpassed that of advancers, with 173 stocks experiencing declines compared to 51 that saw increases.
The largest losers included SoftBank Group, which declined by 5.83 percent, followed by Nissan Motor, which traded 4.97 percent lower, marking its lowest close since February 2009. Terumo also experienced a loss of 4.59 percent. The largest percentage gainers in the index included Resonac Holdings, which experienced an increase of 8.71 percent, followed by Furukawa Electric, which rose by 7.68 percent, and Baycurrent, which saw a gain of 6.15 percent.
