Japan’s Nikkei falls on profit-booking from Takaichi rally

TOKYO – Japan’s Nikkei share average fell more than 1% on Thursday, as investors sold stocks to book profits from a rally driven by expectations for fiscal dove Sanae Takaichi’s new government.

As of 0019 GMT, the Nikkei was down 1.3% at 48,648.86. The broader Topix fell 0.61% to 3,246.49.

“Investors had scooped up stocks ahead of the parliamentary vote to elect Takaichi as prime minister, and as soon as she was elected, they started a selloff as all the good news was priced in,” said Kazuaki Shimada, chief strategist at IwaiCosmo Securities.

Hardline conservative Takaichi was elected Japan’s first female prime minister on Tuesday, sending the Nikkei to a record intraday high of 49,945.95 on that day. The index is set to fall for a second straight session if this momentum holds.

Sentiment was also hurt by concerns over the US-China relationship after reports that the Trump administration was considering curbs on exports to China made with US software.

“The news on the US-China issues became a trigger for the selloff, but it was not a fundamental reason for today’s declines,” Shimada said.

Technology investor SoftBank Group fell 2.97% to become the biggest drag for the Nikkei. Chip-related Advantest and Tokyo Electron lost 2.72% and 2.86%, respectively.

Meanwhile, defence-related shares rose, with Sumitomo Heavy Industries surging 8.3%. Kawasaki Heavy Industries and IHI rose 2.85% and 1.92%, respectively.

The shares rose on expectations that Japan may propose to boost defence spending as Takaichi and US President Donald Trump are scheduled to hold a meeting next week, Shimada said.

Of the more than 1,600 stocks trading on the Tokyo Stock Exchange’s prime market, 58% rose, 36% fell and 4% traded flat.

(Reporting by Junko Fujita; Editing by Subhranshu Sahu)