Nikkei takes breather after Fed move; BOJ in focus

Investors book profits before the long weekend

Japan's Nikkei share average edged down on Friday morning as investors booked profits before the long weekend, with trading subdued ahead of the outcome of a Bank of Japan meeting later in the day.

The BOJ is expected to maintain its commitment to ultra-easy monetary policy, barely a day after the US Federal Reserve announced it will start to taper its massive stimulus from next month.

"The market moved passed a big event, so profit-taking is natural," said Kazuhiro Miyake, a chief strategist at Daiwa Securities, referring to the Fed taper decision.

"But there's more upside to the market as both macro funds which trade on a three-to-six month view and long-term investors who look at fundamentals are pouring money into the Japanese market."

 

Recent gainers retreated, with SoftBank Corp dropping 0.6% and KDDI Corp falling 2.7%. Brokerage firms Nomura Holdings dropped 0.8% and Daiwa Securities Group shed 0.5%.

The Nikkei dropped 0.4% to 15,795.26 in mid-morning trade after rising 1.7% to finish at 15,859.22 on the previous day, its highest close since December 2007. The benchmark rose 4.7% between Tuesday and Thursday.

For the week, the index has risen 2.5%.

With Japanese markets closed for a national holiday on Monday and many foreign investors away for the Christmas break, trading is expected to remain subdued through to year-end, analysts said.

Daiwa's Miyake expects the Nikkei go above the 16,000-mark by year-end.

The Topix fell 0.3% to 1,259.08.

Exporters were mixed after a broad-rally on Thursday on the back of a weak yen. The dollar steadied at 104.29 yen, but still close to a five-year high of 104.37 yen touched in the wake of the Fed's announcement.

Nikon Corp rose 0.7%, Sony Corp added 0.3%, while Toyota Motor Corp shed 0.3%.

Namco Bandai Holdings rose 1.7% after UBS Securities upgraded its rating to 'buy' from 'neutral', citing growing game titles next year.

The Nikkei is up around 50% this year, driven by Tokyo's aggressive fiscal and monetary stimulus aimed at pulling the world's third-largest economy out of two decades of stagnation. The benchmark is on track for its best yearly rise since 1972.