Japan’s Nikkei Slides as Investors Lock in Profits After Election Rally, Asian Markets Quiet for Lunar New Year

BY COMFORT OGBONNA

Japan’s benchmark Nikkei 225 retreated on Tuesday as investors returned from a U.S. market holiday to a region largely quieted by Lunar New Year celebrations. With several Asian exchanges closed, trading volumes were thinner than usual, contributing to cautious sentiment across open markets.

The Nikkei 225 fell 0.8% in afternoon trading to 56,363.39, reversing part of the strong rally that followed the decisive Feb. 8 general election victory of Prime Minister Sanae Takaichi and her ruling party. Investors had initially cheered expectations of increased government spending and tax cuts aimed at stimulating economic growth. However, recent opinion polls suggest that public support for Takaichi is beginning to soften, tempering some of the post-election optimism that had propelled the index to record levels.

Market participants appeared to be locking in profits after the Nikkei’s rapid ascent. Adding pressure was a sharp 5.4% drop in shares of SoftBank Group, a heavyweight technology investor whose movements often sway broader market direction. Weak economic data released Monday also clouded sentiment in Tokyo, reinforcing concerns about the pace of Japan’s recovery and the durability of corporate earnings growth.

Elsewhere in the Asia-Pacific region, markets that remained open showed modest gains. Australia’s **S&P/ASX 200** advanced 0.2% to 8,958.90, while India’s **BSE Sensex** edged up 0.4%. In Thailand, the **SET Index** climbed 0.5%. However, overall regional momentum was subdued as many investors remained on the sidelines during the holiday period.

In the United States, markets were closed Monday in observance of Presidents Day and are scheduled to reopen Tuesday. On Friday, Wall Street delivered a mixed performance. The S&P 500 finished marginally higher, up less than 0.1%, a day after suffering one of its steepest losses since Thanksgiving. The Dow Jones Industrial Average rose 0.1%, while the  Nasdaq Composite slipped 0.2%.

Global equity markets have been fluctuating in recent weeks amid shifting confidence in massive investments tied to artificial intelligence. Investors are weighing whether the surge in AI-related spending can justify lofty valuations, especially for technology stocks that have driven much of the recent market rally. At the same time, inflation concerns remain at the forefront, with traders closely monitoring how persistent price pressures might influence central bank interest rate decisions.

Currency markets reflected cautious trading conditions. The U.S. dollar weakened to 152.88 Japanese yen from 153.51 yen, while the euro edged down to $1.1844 from $1.1852. Commodity markets were mixed: benchmark U.S. crude rose 48 cents to $63.37 a barrel, while Brent crude, the international benchmark, fell 42 cents to $68.23. Precious metals came under pressure, with gold sliding 2.9% and silver tumbling 8.2%.

In cryptocurrency markets, Bitcoin declined 0.9% to trade near $68,300, mirroring the broader pullback in risk-sensitive assets.

With U.S. markets reopening and key economic data releases ahead  including employment figures from Britain  investors are bracing for fresh signals that could set the tone for global trading in the days to come.