The Nikkei average dropped 0.52% to 30,511.71. On Tuesday, it rose above its February peak to reach 30,795.78, the highest level since August 1990.
In a sign of strong sentiment, however, the Nikkei posted a “bullish candlestick”, which appears when a market closes above its opening level for 12 days in a row.
The broader Topix shed 1.06% to 2,096.39.
Japan’s stock market rally has gathered pace since Sept. 3 when Prime Minister Yoshihide Suga announced his plan to step down, bolstering hopes of a new stimulus package. Vaccine Minister Taro Kono is now seen as a leading candidate in the ruling Liberal Democratic Party‘s (LDP) leadership election on Sept 29.
“The market had risen a bit too much too fast … Investors now want to see the outcome of the LDP race. While Kono seems to be viewed as a reformist, it is not entirely clear what kind of economic policies he will adopt,” said Naoya Oshikubo, senior economist at Sumitomo Mitsui Trust Asset Management.
SoftBank Group lost 5.8%, weighed by concerns about its exposure to Alibaba and other Chinese tech firms, as Beijing steps up regulation in the sector.
Property builders were the worst-performing subindex, with a fall of 2.2%. Some analysts attributed the weakness to a spillover from troubles in Chinese real estate shares.
Murata Manufacturing lost 2.7%, while Nitto Denko dropped 3.3%.
Elsewhere, Park24 slumped 7.9% after the parking lots operator posted its sixth consecutive quarterly net loss, hit by the COVID-19 pandemic.
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