FX.co ★ Japan Stock Market Due For Profit Taking

The Japan stock market has experienced an upward trend over the past three sessions, accumulating nearly 1,250 points, representing a 3.3 percent increase. Consequently, the Nikkei 225 index now hovers slightly above the 40,280 mark. However, as the week begins, investors may consider realizing some gains.

The outlook for Asian markets this week is varied, anticipating a downturn in technology stocks, especially given the holiday-shortened trading period. While European markets saw an upswing, the U.S. markets showed a downward trend, which may influence Asian markets to follow suit.

On Friday, the Nikkei saw a notable rise spurred by gains in the financial sector, technology stocks, and most automobile manufacturers. Specifically, the index jumped 713.06 points, or 1.80 percent, to close at 40,281.16, after fluctuating between 39,669.39 and 40,398.23 throughout the day.

In terms of active stocks, a mixed performance was observed: Nissan Motor fell sharply by 7.82 percent, Mazda Motor experienced a modest increase of 0.28 percent, Toyota Motor gained 1.46 percent, Honda Motor climbed 2.07 percent, and Softbank Group rose 1.59 percent. Meanwhile, Mitsubishi UFJ Financial, Mizuho Financial, and Sumitomo Mitsui Financial recorded gains of 1.19 percent, 0.78 percent, and 0.67 percent, respectively. Additionally, Mitsubishi Electric, Sony Group, Panasonic Holdings, and Hitachi saw respective advances of 0.82 percent, 2.00 percent, 0.80 percent, and 1.16 percent.

Reflecting a negative sentiment from Wall Street, the major averages started and ended the trading day lower, closing near session lows. The Dow Jones Industrial Average dropped 333.59 points, or 0.77 percent, finishing at 42,992.21. The NASDAQ declined by 298.37 points, or 1.49 percent, ending at 19,722.03, while the S&P 500 retreated by 66.75 points, or 1.11 percent, closing at 5,970.84.

For the week, both the Dow and the NASDAQ, along with the S&P 500, showed gains, with the Dow posting a 1.4 percent increase and the NASDAQ and S&P 500 each rising by 1.5 percent. However, trading volumes were lower, influenced by the holiday period between Christmas and New Year's.

On the economic side, U.S. retail inventories, excluding automobiles, rose by 0.6 percent in November, following a revised increase of 0.3 percent in the previous month, based on preliminary estimates.

Oil prices saw an uptick on Friday as a significant reduction in U.S. crude inventories was reported last week. The ongoing geopolitical tensions between Russia and Ukraine also bolstered oil prices. West Texas Intermediate crude oil futures for February finished at $70.60 a barrel, marking a 1.4 percent gain.

In Japan, attention is focused on the upcoming December manufacturing PMI results from Jibun Bank, expected to register at 49.5, slightly up from 49.0 in November.