Asian stock markets were mostly lower in thin volume Friday, with profit-taking pulling Japanese shares down from a near six-year high hit in the prior session.
The Nikkei 225 index was down 1.0% after closing Thursday at its highest level since December 2007. A stronger dollar kept a lid on losses, trading at ¥102.31 in Asia versus ¥102.37 in overnight trade.
“The dollar’s upward creep will forestall some players from taking profits,” says Tachibana Securities market analyst Kenichi Hirano.
Investors have piled into bets against the yen’s rise this month, taking another run at a trade that proved lucrative for some of the industry’s biggest money managers this year.
The currency is down nearly 4% this month as expectations rise for the Bank of Japan to ramp up its monetary easing program.
Foreign investors are also stepping up bets on the Japanese stock market, scooping up about ¥2 trillion ($19.6 billion) worth of shares since the middle of November. That is the largest two-week buying spree since mid-April and has helped put the benchmark Nikkei up 9.7% this month. The index has rallied more than 50% so far this year.
Trade was muted elsewhere in Asia after a U.S. market holiday Thursday left traders with few cues for the session. Hong Kong’s Hang Seng Index rose 0.3%, renewing an attempt to set a new high for the year. The index tested the 24,000 level Thursday but fell back by the close.
“The surprise pullback…in late trading yesterday is very likely to add more resistance to the 24K mark,” said Edward Fung, head of investment advisory at Kim Eng Securities. “Investors may once again be turning cautious.”
Australia’s S&P/ASX 200 fell 0.2% while Korea’s Kospi Composite dropped 0.3%.