Tokyo investors will be cautious next week with a sense of achievement after the benchmark Nikkei index topped the 20,000 level and as the full-fledged corporate earnings season approaches.
On Friday, Tokyo stocks closed down 0.15 percent, after the benchmark Nikkei index briefly broke through the 20,000 level last seen 15 years ago.
The Nikkei 225 reached 20,006.00 in opening trade, prompting joyful traders at brokerage houses to break into applause.
But the cheer was short-lived and the index lost 30.09 points to close at 19,907.63.
Over the week the index advanced 2.43 percent.
The Topix index of all first-section issues shed 0.29 percent, or 4.65 points, to close at 1,589.54. Over the week it rose 1.62 percent.
"The market had a sense of achievement as it broke through the major line of 20,000. Profit taking emerged, pressuring the market today," said Kenji Shiomura, senior strategist at Daiwa Securities.
"As for the coming week, it is hard to imagine that (the Nikkei) will surge ahead rapidly given the strong sense of achievement for now."
He also noted the earnings season was going into a top gear, which can invite "caution" among investors.
Friday's early rise in the index was largely influenced by heavyweight Fast Retailing, the operator of fast-fashion brand Uniqlo, whose shares jumped 3.77 percent a day after announcing strong earnings.
The stock climbed to 50,650.0 yen mid-morning, the highest intraday level since its listing in 1997. At the close it was up 2.47 percent at 49,700.00.
Among losers were shipping firm Mitsui O.S.K. Lines, which dropped 1.96 percent to 400 yen, Takeda Pharmaceutical, which slipped 0.31 percent to 6,065.0 yen, and Toyota, which slid 0.49 percent to 8,326.0 yen.
Strategists are upbeat over the outlook for stock prices on expectations of good earnings at Japanese companies, while acknowledging a short-term overshoot.
"When we look back on this moment, the 20,000 figure should just be a stop along the road," said Juichi Wako, a senior strategist at Nomura Holdings.
"It wouldn't be surprising if better-than-expected earnings lift the Nikkei to 21,000 or 22,000 by year's end.
"However, above the 20,000 mark, we might begin to hear voices that stocks are a bit overvalued," he said.
Ayako Sera of Sumitomo Mitsui Trust Bank, said: "It will not be a surprise if we see some selling to take profits at this level."
The dollar held steady after rising on an encouraging US unemployment claims report.
The greenback was at 120.53 yen against 120.59 yen in New York late Thursday but up from 120.28 yen in Tokyo earlier Thursday.
The US Labor Department said Thursday that the number of first-time unemployment claims filed in the past four weeks fell to a nearly 15-year low, suggesting a stronger labour market.
The robust figures stoked speculation about the Federal Reserve's plan to raise ultra-low interest rates, boosting the dollar in a positive move for Japanese exporters.
The US data also came a day after minutes of the Fed's last meeting suggested the first interest-rate increase since 2006 was still on the table for this year.
On Thursday big gains in petroleum stocks lifted the US equity market as investors bet on more large energy mergers following Royal Dutch Shell's huge takeover of BG Group.
The Dow Jones Industrial Average rose 0.31 percent while the broad-based S&P 500 gained 0.45 percent.