Nikkei falls from 33-year high after sharp gains spark caution

Japan’s Nikkei index rose to its highest level in more than three decades on Monday before changing course and closing lower as investors remained wary of the index’s recent significant gains.

The Nikkei fell 0.59 percent to 33,388.03 points at the close, after earlier rising to its highest level since March 1990.

The broader Topix index also changed its course and fell 0.77 percent to 2,372.60 points at the close.

“Investors sold stocks after being cautious due to the sharp gains achieved by the Nikkei index recently,” said Takehiko Masuzawa, head of trading at Philip Securities Japan.

The Nikkei has risen 8% so far this month and is on track for its largest monthly gain since November 2020.

Chip-related stocks had the biggest negative impact on the Nikkei index, with Tokyo Electron stock falling 0.87 percent and Advantest falling 1.55 percent.

Shares of automakers fell, with Toyota Motor shares falling 3.89 percent and Honda Motor shares falling 3.78 percent in light of the rise of the yen against the dollar.

The dollar fell to its lowest level in two months on Monday, continuing its downward trend from last week as traders reaffirmed their belief that US interest rates have peaked.

The sub-index for the auto and spare parts sector shares fell 3.43 percent, becoming the worst performing among the 33 industrial sub-indices on the Tokyo Stock Exchange.

Panasonic Holdings shares continued the rise that began on Friday, jumping 4.98 percent after the company announced the sale of a stake in its automotive systems business to funds managed by Apollo Global Management, a private American investment company.

Tokyo Marine Holdings shares jumped 5.63 percent after the accident insurance company raised its annual profit forecast and announced plans to buy back up to two percent of its shares.

Insurance sector shares rose 1.58 percent, becoming the best performers among the sub-indices.