TOKYO: Tokyo stocks ended 0.68 percent lower on Tuesday as merchants got their cash off the table after scoring seven consecutive expands, while Wall Street recoiled from record highs.
The Nikkei 225 index at the Tokyo Stock Exchange, which closed at a fresh seven-year high on Monday, slipped 122.26 points to 17,813.38 at the closing bell. The Topix index of all first section shares fell 11.49 points, or 0.79 percent, to 1,436.09.
“The market is in line for profit-taking after rising for seven straight days,” having risen nearly four percent, said Yoshihiro Okumura, general manager at Chibagin Asset Management.
A fall in crude prices dragged down US stocks and also weighed on Japanese shares.
On Wall Street the Dow fell 0.59 percent, the S&P 500 was down 0.73 percent and the Nasdaq lost 0.84 percent
“The weakness in oil prices poses both good and bad scenarios for Japan,” Okumura said.
“If it continues, it’s great for shippers, airlines, utilities, and auto- and tyre-makers,” he said but added that it works against the Bank of Japan’s campaign to lift inflation and the economy.
The latest predicament “makes more likely the possibility that more rounds of quantitative easing will be in the pipe”, he added.
Stocks buying was also hit by the halt in the yen’s rise against the dollar, analysts said.
The greenback was at 120.00 yen, compared with 120.78 yen in New York and sharply down from the levels above 121 yen seen in Tokyo earlier Monday.
A strong yen is negative for Japanese exporters as it makes them less competitive abroad and erodes profits when they are repatriated.
The euro bought $1.2336 and 147.84 yen in Tokyo against $1.2308 and 148.65 yen in US trade.
“Lower oil, lower Wall Street, and a lower dollar should spell long overdue profit-taking for the Nikkei after seven straight sessions of gains,” said Shunichi Otsuka, general manager of research and strategy at Ichiyoshi Asset Management.
But the Bank of Japan’s planned share buying continues to provide support at the Tokyo Stock Exchange, he added.
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