Rebound in Japan’s Nikkei limited by currency intervention risk – Times of India

by The Technical Blogs


TOKYO: Japan‘s Nikkei share average rebounded on Tuesday, briefly scaling 40,000 points as traders bought on the dip before easing back due to the risk of currency intervention by the central bank.
The Nikkei was up 0.13% at 39,853.20 at the midday break, bouncing back after profit-booking pushed it to a two-week low on Monday.
The index is up about 19% this year and scaled the 40,000 mark to record highs last month.
Traders took advantage of the drop in the previous session to buy stocks, boosting many big-name companies.
Uniqlo parent firm Fast Retailing was up 0.3% and chip-making equipment giant Tokyo Electron gained 3.2%.
Technology-related stocks were the largest lift to the index, receiving a tailwind from their U.S. peers as the AI frenzy continued to boost the US semiconductors index.
Chip-testing equipment maker Lasertec and Shin-Etsu Chemical, which manufactures semiconductor silicon products, rose 1.8% and 0.8%, respectively.
The yen’s weakness, which boosts exporters‘ profits, was a double-edged sword as the risk of currency intervention weighed on the overall index, said Masahiro Ichikawa, chief market strategist at Sumitomo Mitsui DS Asset Management.
“If the yen were to appreciate rapidly due to intervention, there is a strong possibility that the Nikkei could fall.”
That’s created a “heightened sense of caution,” which could make it difficult for the index to keep in the 40,000-point range for now, Ichikawa said.
Japanese Finance Minister Shunichi Suzuki said on Tuesday that authorities were ready to take appropriate action against excessive currency market volatility, without ruling out any options.


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