(MENAFN) Japan's Nikkei index experienced a downturn, closing at its lowest level in two weeks as it slipped below the 40,000-point threshold. Traders seized the opportunity to sell stocks and capitalize on profits on the first day of the country's new fiscal year. The Nikkei index recorded a decline of 1.4 percent, settling at 39,803.09 points, its lowest closing level since March 18. Initially, the index had opened 0.7 percent higher, only to see a reversal in trend throughout the trading session. Similarly, the broader Topix index also witnessed a decline, falling by 1.71 percent to 2,721.22 points.
Shoichi Arisawa, the general manager of investment research at Aiwaicosmo Securities, attributed the downward trend to the customary practice among institutional investors of selling stocks to realize profits at the onset of the fiscal year. This behavior is often observed as investors seek to rebalance their portfolios and lock in gains following periods of market growth.
The Nikkei index had experienced a remarkable ascent in 2024, registering a 19 percent increase and surpassing the 40,000-point milestone to reach record levels in March. This surge had been fueled by a consistent upward trajectory, with the index climbing by 54 percent since early 2023.
Meanwhile, a survey conducted by the Bank of Japan revealed a surge in optimism within the Japanese services sector during the first quarter, reaching its highest level in 33 years. This positive sentiment was attributed to factors such as the boom in tourism and increased profitability stemming from rising prices.
Furthermore, the survey indicated that major companies are poised to ramp up their capital spending by 4 percent in the ongoing fiscal year, extending until March 2025. This follows an anticipated increase of approximately 11.5 percent in capital spending during the previous fiscal year, underscoring a continued commitment to investment and growth among Japanese corporations.
In summary, while the Nikkei index experienced a temporary setback amid profit-taking activities, broader economic indicators point towards underlying optimism and resilience within the Japanese economy, with firms poised for further investment and expansion in the coming fiscal year.
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