Japan's Nikkei retreats from 6-week high as investors lock in gains

By Reuters News

By Rocky Swift

- Japan's Nikkei 225 .N225 retreated from a 6-week high on Friday as investors locked in gains and turned cautious over the outlook for interest rates, inflation, and geopolitical risks.

The benchmark Nikkei 225 .N225 slid 0.79% to 68,413.03, still on track for a 3% advance on the week. The broader Topix .TOPX slipped 0.57% to 4,108.53.

US stocks ended higher overnight as Treasury yields retreated from multi-decade highs, but the overall tone remained choppy with investors focused on the Federal Reserve's rate trajectory and inflation risks.

In Japan, data showed core inflation in Tokyo accelerated in September at the fastest pace in 10 months, bolstering the case for further rate hikes. Geopolitical tensions also weighed, with the US-Iran war in the Middle East and fresh disruptions to global energy markets after China suspended oil product exports beyond Hong Kong and Macau.

After the Nikkei's 3.3% surge on Thursday, "concerns about short-term overheating are likely to lead to profit-taking," according to a note by Yuta Okamoto, an analyst at Tokai Tokyo Intelligence Laboratory.

Even so, the outlook for domestic shares remains positive, he added, bolstered by the Bank of Japan's tankan survey released on Thursday showing sentiment among large manufacturers rose for a sixth straight quarter.

"It appears that expectations for a rise in Japanese share prices, based on earnings prospects, remain high," Okamoto wrote.

Breadth was negative, with 53 advancers in the Nikkei 225 against 170 decliners and two unchanged.

The largest losers were SoftBank Group 9984.T, down 5.27%, followed by Taiyo Yuden 6976.T, trading 4.98% lower, and Tokyo Electron 8035.T, which lost 3.66%.

The largest gainers in the index were Furukawa Electric 5801.T, up 6.25%, followed by Baycurrent 6532.T, 6.04% higher, and Mitsui Kinzoku 5706.T, which added 5.40%.

Capital.com is an execution-only brokerage platform and the content provided on the Capital.com website is intended for informational purposes only and should not be regarded as an offer to sell or a solicitation of an offer to buy the products or securities to which it applies. No representation or warranty is given as to the accuracy or completeness of the information provided.

The information provided does not constitute investment advice nor take into account the individual financial circumstances or objectives of any investor. Any information that may be provided relating to past performance is not a reliable indicator of future results or performance.

To the extent permitted by law, in no event shall Capital.com (or any affiliate or employee) have any liability for any loss arising from the use of the information provided. Any person acting on the information does so entirely at their own risk.

Any information which could be construed as “investment research” has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication.