Nikkei drops on profit-taking, investors jumpy before Brexit vote

By: | Published: June 22, 2016 9:16 AM

Japan's Nikkei share average dropped on Wednesday, snapping a three-day winning streak as investors took profits from recent gains against a background of nerves over Thursday's Brexit referendum.

NikkaiFor the week, the Nikkei has dropped 5.6 percent and is poised to post the biggest weekly drop in more than four months. (Reuters)

Japan’s Nikkei share average dropped on Wednesday, snapping a three-day winning streak as investors took profits from recent gains against a background of nerves over Thursday’s Brexit referendum.

The Nikkei shed 1.0 percent to 16,007.52 in midmorning trade after rising 4.7 percent in the past three days.

“Many people want to take profits before the event, and they want to take new positions after the Brexit outcome,” said Takatoshi Itoshima, chief portfolio manager at Commons Asset Management, adding that trading may be subdued throughout the day.

Recent opinion polls have mostly shown a shift towards keeping Britain in the European Union, but there are signs that momentum has stalled for the ‘In’ camp and the vote still looks too close to call.

Exporters lost ground on the profit-taking, with Toyota Motor Corp falling 0.8 percent, Honda Motor Co shedding 1.7 percent and Panasonic Corp dropping 1.3 percent.

The dollar stood at 104.41 yen after briefly trading above 105.00 yen for the first time in nearly a week after Federal Reserve Chair Janet Yellen held the line of “gradual increases” in U.S. rates.

Also Read: Nikkei rebounds as strong yen trend pauses; Brexit worries loom

In testimony before Congress, Yellen expressed general optimism about the U.S. economy and said gradual hikes in the federal funds rate were likely to be needed.

Bucking the weakness, online gaming company Gumi Inc rose more than 7 percent after it said it will reduce its capital reserve and fully cancel out a loss of 5.06 billion yen that had been brought forward.

SoftBank Group Corp rose 2.7 percent after Tencent Holdings Ltd, China’s biggest gaming group, said it will buy a majority stake in ‘Clash of Clans’ mobile game maker Supercell from SoftBank in a deal valued at roughly $8.6 billion. Meanwhile, news that heir-apparent Nikesh Arora was to step down left investors uncertain over SoftBank’s succession planning.

The broader Topix dropped 1.1 percent to 1,279.28 and the JPX-Nikkei Index 400 declined 1.0 percent to 11,549.03.

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