Japan’s Nikkei share average retreated from a record intraday high on Monday, as investors took profits following a multi-day rally.
The Nikkei secured a record high of 41,112.24 in a choppy trading session, but closed 0.32% lower at 40,780.70. The broader Topix slipped 0.57% to 2867.61.
Sentiment was initially boosted by a strong performance in Wall Street’s main indexes on Friday after softer-than-expected U.S. labour data fuelled expectations of interest rate cuts as early as September. The tech-heavy Nasdaq and benchmark S&P 500 hit record highs.
A portion of Japan’s tech shares tracked their U.S. peers’ gains to support the Nikkei.
However, there was a sense that shares were somewhat overbought, said Maki Sawada, an equity strategist at Nomura Securities. Investors sought to lock in profits after Japan’s main stock indexes rode five consecutive days of gains to hit record intraday peaks last week.
Yen appreciation could also weigh on the market if market participants interpret testimony from Federal Reserve Chair Powell as dovish or U.S. inflation data shows more cooling later this week, said Charu Chanana, global market strategist and head of FX strategy at Saxo.
“The scope of outperformance for Japanese equities could continue to wane as the yen recovers from its record lows.”
A weaker yen tends to boost Japanese exporters’ overseas earnings when repatriated.
Of the Nikkei’s 225 constituents, only 53 shares advanced, while 171 declined.
In individual stocks, electrical equipment maker Yaskawa Electric fell 4.4% to become one of the worst performers by percentage after disappointing revenue results.
Chip-making equipment giant Tokyo Electron slid 0.9%.
On the other hand, SoftBank Group rose 0.4% after U.S.-listed shares of British chip designer ARM Holdings , in which the Japanese firm has a 90% stake, surged to an all-time high.
Uniqlo parent firm Fast Retailing also edged up 0.4%.