Tuesday, March 21

Nikkei set for first weekly gain in five despite weak tone on Friday

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TOKYO — Japan’s Nikkei share average ended the morning session little changed on Friday after vacillating between gains and losses, but remained on course for a strong weekly advance after a four-week losing run.

The Nikkei was 0.03% weaker at 27,233.83 at the midday break. After opening lower, it rallied for the first quarter of an hour, before dropping back to trade in negative territory for most parts of the rest of the session. About two stocks fell for every one that gained.

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Real estate was the worst performing sector, dropping 1.14%, while industrial companies including automakers also slumped.

However, the Nikkei remained on course for a 1.93% advance for the week, tracking moves in global shares on overall healthy corporate earnings, led by US firms.

The broader Topix slipped 0.13% to 1,917.33, but was set for a 2.16% weekly gain.

“There are many reasons still to be cautious, but Japanese stocks were sold off quite a bit in January already, making it hard to sell them further at this point,” said a market participant at a domestic securities company.

The Nikkei dropped 6.22% last month, its worst performance since March 2020.

On Friday, worries about a faster pace of global monetary policy tightening that might even sway the ultra-dovish Bank of Japan weighed on the mood, even as strong results from Amazon after US market hours lifted Wall Street futures.

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Overnight, the Bank of England raised its policy rate by a quarter point, but almost half of officials wanted a half point increase. Meanwhile, the European Central Bank finally acknowledged the risks from mounting inflation and opened the door a crack to a potential rate hike this year.

A closely watched US jobs report due later in the global day would provide clues to the pace of monetary tightening at an increasingly hawkish Federal Reserve.

Japanese government bond yields rose to six-year highs on Friday, with that on the five-year note topping 0%.

Nippon Sheet Glass was the Nikkei’s biggest percentage decliner with a 9.39% drop. SoftBank Group was the biggest drag by index points, down 1.44%.

Toyota Motor lost 0.85%.

At the other end, games maker Konami Holdings surged 10.89% following a favorable earnings report, making it the Nikkei’s biggest percentage gainer. Nintendo jumped 4.45%.

Uniqlo store operator Fast Retailing was the biggest winner by index points, registering a 2.26% advance.

Financials also gained, rising 0.90% to be the Nikkei’s best performing sector, as higher global bond yields boosted their earnings outlook. (Reporting by Tokyo markets team; Editing by Subhranshu Sahu)