Japanese Stocks Close Lower After Breaching 1991 Milestones

Japan’s stock benchmarks declined as some investors took profits after the benchmark indexes broke above key milestones for the first time in more than a quarter century.

Shares in Tokyo erased earlier gains as banks and chemicals companies weighed the most on the Topix index. Earlier in the day, the Topix index rose above 1,900 and the Nikkei 225 Stock Average above 24,000 for the first time since 1991. U.S. equities reached fresh records on Wednesday amid optimism a tax overhaul will boost earnings.

“Given the global rally in stocks, led by the U.S. market, Japanese stocks breached the milestones,” said Takashi Ushio, head of investment at Marusan Securities Co. in Tokyo. “Yet it’s easy for the market to be overwhelmed by the sense of accomplishment after both the Topix and the Nikkei indexes broke through key psychological levels.”

The 14-day relative strength index for the Topix closed below 63 after morning gains took it above 70, a level seen as overbought territory.

Tokyo Stock Exchange figures released after the close showed foreigners turned net sellers of Japanese equities in the week ended Jan. 12. Non-resident investors sold a net 31.6 billion yen ($284 million) of the nation’s shares after buying 485 billion yen’s worth in the previous week.

Summary

  • Topix -0.7% to close at 1,876.86 in Tokyo, after rising as much as 0.8% to touch 1,906.39
  • Nikkei 225 -0.4% to close at 23,763.37, after climbing to 24,084.42 earlier
  • Yen +0.1% at 111.17 per dollar after declining 0.8% on Wed.
  • Banks: Mizuho Financial Group -1.8%, Mitsubishi UFJ -0.9%, Sumitomo Mitsui -1.1%
  • Chemicals: Mitsubishi Chemical -3.5%, Shiseido -2.2%, Asahi Kasei -2.3%
  • Ricoh -5.8%; Nikkei reports operating profit projection is below estimates
  • Tosoh -4.8%; SMBC Nikko sees momentum slowing next year
  • Chip equipment: Screen +4.9%, Advantest +3.1%, Tokyo Electron +2.8%; stocks rise after ASML results beat estimates
  • Japan Petroleum +1.3%; oil extends gains above $64 a barrel and Morgan Stanley MUFG boosts price target
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