TOKYO: Japan’s Nikkei share average fell 1% on Thursday, giving up most of its gains from the previous session, as the yen’s slide past the closely watched 160 per-dollar level put traders on high alert for intervention.
The Nikkei had dropped 1.05% to 39,248.88 by 0145 GMT, retaining just 75 points of Tuesday’s rally.
Technology shares underperformed with a sell-off in US chipmaker Micron Technology in after-hours trading souring the mood.
The broader Topix lost 0.49%, with a sub-index of growth shares sliding 0.8%, compared with a 0.22% decline for value shares.
Risk events loom for investors in all asset classes, including a US presidential debate later in the day, and the release of the Federal Reserve’s preferred inflation gauge on Friday.
The yen was last at 160.44 per dollar, after touching 160.88 overnight for the first time in 38 years.
A plunge to 160.245 in late April triggered official Japanese currency intervention worth about 9.8 trillion yen ($61.08 billion).
Japan’s Nikkei surges to over two-month high on tech rally
The proximity to the quarter-end may also be influencing markets.
The Nikkei saw a three-day run of increasingly strong advances, culminating in Wednesday’s 1.26% surge.
“The size of yesterday’s Nikkei gains were very surprising, and I don’t expect it’s just me who thinks that,” said Kazuo Kamitani, an equity strategist at Nomura Securities, adding that the large volume suggested it was the work of overseas funds or securities dealers.
The technical test for the Nikkei now is whether it can reclaim the May 20 high of 39,437 by the end of the week, he said.
“If not, yesterday’s rally will likely have been just an anomaly,” he added.
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