Nikkei retreats

Japan's Nikkei average fell for the first time in three sessions on Thursday, with profit-taking triggering a reversal after gains in the morning session, although strength in securities shares limited losses. The benchmark Nikkei closed down 0.7 percent to 14,191.48, after rising as much as 0.9 percent to 14,409.82, just off Wednesday's intra-session peak of 14,421.38, its highest since June 2008.
The Topix fell 1.1 percent to 1,181.83 on Thursday. By the midday break, the Nikkei was up 0.7 percent to 14,381.99, nearing Wednesday's intraday peak of 14,421.38, its highest level since June 2008. The securities subsector, which gained 3.1 percent, was the best performer on hopes of an increase in commission fees on the back of an upbeat market. Nomura Holdings rose 5.1 percent while Daiwa Securities was up 1.5 percent.
The Nikkei is trading 7 percent above its 25-day moving average of 13,436.46, which indicates that shares are overbought. "Japanese stocks have already been high and some investors have expressed concern of a short-term pull-back, but there's been renewed investor appetite after both US and European stocks hit record highs," said Kenichi Hirano, a strategist at Tachibana Securities.
The S&P 500 closed at an all-time high for a fifth session on Wednesday, while German shares hit all-time highs and the FTSEurofirst 300 index of leading regional shares rose to a five-year high. After a brief pause, the Japanese market has resumed its record run in recent sessions, underpinned by central bank and government policies to revive growth and as the United States, Germany and China snap a run of soft data with upbeat economic reports.
The Topix was up 0.3 percent to 1,198.33 on Thursday. The Nikkei has gained 38 percent this year on Prime Minister Shinzo Abe's expansionary policy and the central bank's bold monetary policy. Over the same period, both the benchmark S&P 500 and the Dow Jones industrial average have added 15 percent and the FTSEurofirst 300 index has advanced 8.4 percent.
"Japan outperforms its global peers. But it has more upside because speaking from a standpoint of an expected improving economy, Japan seems most promising (for investors)," said Hikaru Sato, senior technical analyst at Daiwa Securities. Toyota, whose American Depository Receipts (ADRs) rose more than 3 percent, gained 1.4 percent in Thursday trade and was the third-most traded stock by turnover despite its conservative profit forecast for the year through March 2014.
Toyota expects operating profit of 1.8 trillion yen ($18.17 billion) in the current fiscal year, which would be below its peak of 2.3 trillion yen in the year ended March 2008. Nomura Securities, which hiked Toyota's target by nearly 30 percent to 7,500 yen from 5,800 yen while keeping a 'buy' rating, forecast a 68 percent annual rise in operating profit to 2.21 trillion yen for the current fiscal year.
The brokerage assumed the dollar would trade at an average 97 yen and the euro at 126 yen. Each 1 yen weakening against the US dollar and euro boosts operating profits by 45.0 billion yen and 4.0 billion yen, respectively, Nomura said. Other exporters also rose, with Nissan Motor Co rising 2.7 percent and Sony Corp gaining 0.8 percent. But Toshiba Corp dropped 3.5 percent after it posted a worse-than-expected operating profit for the year ended March 31 due to weak TV sales. The dollar last traded at 98.83 yen, while the euro was at 130.07 yen.