Key U.S. monthly jobs data, due later in the day, a three-day weekend and concerns that the Tokyo market has gone too far too fast are expected to encourage investors to take profits.
The focus for investors will be on the U.S. economy and inflation.
Investors were disappointed by the fact that Toyota's upbeat earnings failed to turn market sentiment bullish today.
A stronger dollar gives investors the confidence to bet on stocks. I'm expecting a broad rally as investors anticipate more gains in stocks next year.
The market is on a strong footing as more investors return after the holiday week and those who made profits in recent trading are reinvesting their cash into stocks.
The broader market will probably struggle to make any headway today. Investors are likely to focus on companies raising dividends and pick up their shares.
Foreign investors are lowering their weighting of Japanese stocks. Their order placements must be closely watched.
The Nikkei 225 had shed more than half the gains it added in its previous rally, so it was a good time for investors to hunt for bargains.