Nikkei drops ending a 3-day winning streak

Japanese stocks fell on Friday, tracking declines on Wall Street, after higher-than-expected US inflation data raised the possibility that the Federal Reserve (the US central bank) would be forced to keep interest rates high for a longer period.

According to Reuters, the Japanese Nikkei index’s losses were limited due to a 5.75% jump in the index’s heavyweight Fast Retailing, which is the company that owns the Uniqlo brand, after a strong earnings report.

The Nikkei index closed on Friday, down 0.55% at 32,315.99, ending a series of gains that lasted 3 days. The broader Topix index also fell 1.44%

“It is an environment ripe for profit-taking,” said Maki Sawada, a strategist at Nomura Securities, noting that the Nikkei index rose 4.8 percent over the past three days and the imminent weekend.

Even with today’s heavy selling, the Nikkei index is still up 4.26% during the week after a series of losses over the previous three weeks.

Among the 33 industrial groups on the Tokyo Stock Exchange, only the mining sector, which includes energy companies, escaped losses, while the textile sector led declines by 2.33 percent.

The retail sector fell 1.4% despite the jump in Fast Retailing shares. While Sumitomo Pharma stock was the biggest loser, it fell 6.33%.

Automaker Nissan shares fell 2.71 percent, while Toyota shares fell 1.92 percent, and Nintendo and Sony Group shares fell 2.43 percent and 1.95 percent, respectively.