Japan Nikkei falls on profit booking

Headline indices of the Japan share market were lower on penultimate session of 2018, Friday, 28 December 2018, as investors elected to withdraw profit off the table after two straight days of gains amid yen appreciation against greenback and as official data showing industrial production fell 1.1% in November. Meanwhile, selloff pressure mounted amid fears of a monetary policy mistake by the Federal Reserve, an ongoing government shutdown in Washington and potential signals the global economy may be slowing down. Investors are also watching developments on the trade front as China and the U.S. try to strike a deal on trade and the clock ticks down on the two nations' tariff ceasefire. Total 23 subindexes of the Tokyo Stock Exchange's 33 subindexes were in negative territory, with shares in Oil & Coal Products, Retail Trade, Pharmaceutical, Services, Electric Power & Gas, and Precision Instruments being notable losers, whereas Nonferrous Metals, Iron & Steel, and Marine Transportation were notable gainers. In late afternoon trades, the 225-issue Nikkei index fell 60.08 points, or 0.3%, at 20,017.54. The broader Topix index of all First Section issues on the Tokyo Stock Exchange dropped 6.65 points, or 0.44%, to 1,494.98.

Exporter shares were mostly down as the safe-haven yen strengthened on Friday, as renewed US-China trade tensions and weaker-than-expected data revived global growth fears. Panasonic, Canon, Mitsubishi Electric, Sony, Honda, and Toota were lower in the range of 0.2% to 1%

Shares of NEC Corp. fell more than 1% after the company said Thursday that it will acquire Danish information technology company KMD for about 136 billion yen.

On the economic front, Japan's industrial output decreased 1.1% in November compared to the previous month, but is predicted to be "picking up slowly," according to a report by the Ministry of Economy, Trade and Industry. The industrial output stood at 104.7 against the 2015 base of 100, following a 2.9-percent rise in October. Production of industrial shipments declined 1.4% to 103.1 while inventories rose 0.2% to 101.5 in November. As to future forecasts, manufacturers expect the output to rise 2.2% in December and then decrease 0.8% in January, according to the ministry.

The Ministry of Internal Affairs and Communications said that the jobless rate in Japan came in at a seasonally adjusted 2.5% in November, unchanged from the October reading. Also, the Ministry of Internal Affairs and Communications said that overall consumer prices in the Tokyo region - considered a leading indicator for the nationwide trend - were up just 0.3% on year in December, down from 0.8% in November. Core CPI, which excludes volatile food prices, advanced an annual 0.9% - in line with expectations and down from 1.0% in the previous month.

CURRENCY NEWS: The Japanese yen, which can be a haven during market uncertainty, appreciated in the upper 110 yen zone against dollar on Friday as renewed US-China trade tensions and weaker-than-expected data revived global growth fears. Trade tensions between the world's two largest economies have been one of the biggest drivers of risk this year, though Washington and Beijing earlier this month agreed to a 90-day ceasefire in their tariff dispute while they try to negotiate a durable deal.

The dollar was quoted at 110.85-86 yen compared with 110.93-111.03 yen in New York and 110.93-94 yen on Thursday in Tokyo. The euro, meanwhile, fetched 126.77-78 yen against 126.91-127.01 yen in New York and 126.25-29 yen in late Thursday afternoon trade in Tokyo. Markets remain sceptical whether the two sides can bridge their differences, which go beyond trade to other issues such as intellectual property rights. The anxiety in markets has helped yen put on 2.3% this month.

OFFSHORE MARKET NEWS: U.S. stocks roared back to end in positive territory on Thursday, with the Dow Jones Industrial Average adding 1.1%, after suffering steep losses for much of the session. The gains come a day after Wall Street indexes posted their biggest daily%age increases in nearly a decade following a sharp plunge at the week's start. The Dow Jones Industrial Average was up 260.37 points or 1.1% at 23,138.82. The Nasdaq rose 25.14 points or 0.4% to 6,579.49 and the S&P 500 advanced 21.13 points or 0.9% to 2,488.83.

The major European markets closed lower on Thursday. The German DAX Index plunged by 2.4%. The U.K.'s FTSE 100 Index tumbled by 1.5% and the French CAC 40 Index dropped by 0.6%.

Crude oil prices remained choppy, with U.S. crude futures up 1.77% at $45.4 per barrel after sliding 3.5% the previous day. U.S. crude had rallied 8% midweek after dropping to a 1-1/2-year low of $42.36 at the week's start. Crude has lost more than a third of its value since the beginning of October and is heading for declines of more than 20% in 2018.In addition to supply concerns, worries about slowing global economic growth have dampened investor demand for riskier asset classes and pressured crude.

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