Japan's Nikkei tumbled on Friday, led by SoftBank and other large-cap stocks, hit by a dull futures and options expiry and worrisome economic indicators from China and Japan. The Nikkei share average dropped 2.0 percent at 21,374.83. The index had climbed 3.2 percent, or 668 points, in the last two days.
For the week, the Nikkei fell 1.4 percent. The broader Topix dropped 1.5 percent to 1,592.16. China's November industrial output grew 5.4 percent from a year earlier and retail sales rose 8.1 percent, missing forecasts, official data showed on Friday. Nikkei futures and options contracts expiring in December settled at 21,618.88, according to Japan Exchange Group.
Investors' appetite for the Nikkei before its futures settlement was shown in the so-called NT ratio, which had soared to 13.50 on Thursday, the highest level since 1997. Selling by investors who had hoped for a higher Nikkei futures and options settlement was putting pressure on the market, traders said.
Among large-cap stocks, SoftBank Group Corp stumbled 4.6 percent, Fanuc shed 3.2 percent and Tokyo Electron plunged 5.5 percent. "Today's selling seems a bit overdone so it is likely that those who expected that the Nikkei futures would settle higher are selling these large Nikkei components on disappointment," said Naoki Fujiwara, a fund manager at Shinkin Asset Management.
Traders also noted that US-China trade tensions are expected to drag on, pulling down cyclical stocks such as tech and machinery makers. Advantest Corp declined 2.7 percent, TDK Corp shed 2.0 percent and Kyocera Corp declined 2.5 percent. On Thursday, US Commerce Secretary Wilbur Ross told Bloomberg TV that China will need to do more than what it has promised so far to ease trade tensions.
"The market is really sensitive to headlines now. It can lose 100 or 200 points on a single headline and can retrieve the same amount on an other headline," said Shoji Hirakawa, chief global strategist at Tokai Tokyo Research Institute. Foreign investors sold a net 600.1 billion yen ($5.29 billion) worth of Japanese cash stocks in the first week of December, marking a fourth straight week of selling, data from Japan Exchange Group showed. The figure was the second biggest for the year.
Traders also noted that sentiment soured after the Bank Of Japan's tankan survey showed that large Japanese manufacturers' sentiment index for the outlook worsened for the first time in three quarters.
They added that concerns about US-China trade tensions and the outlook for the US economy as well as a slowdown in China demand are likely to linger. Japan Display Inc jumped 35 percent after the company said that it is in talks with outside parties including Chinese companies about alliances, though nothing has been decided.
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