Japan’s Nikkei Ekes Out Gains as Profit-Taking, Yen Risk Weigh (Update 1)

Reuters

12:20 JST, April 2, 2024 (updated at 16:30 JST)

TOKYO (Reuters) – Japan’s Nikkei share average closed higher on Tuesday, briefly scaling 40,000 points before profit-taking and the risk of currency intervention by Japanese authorities hemmed in gains.

The Nikkei finished the day up 0.1% at 39,838.91.

The index is up about 19% this year and scaled the 40,000 mark to record highs last month, although profit booking pushed it to a two-week low on Monday.

Traders took advantage of the drop to buy stocks, with many companies getting a boost before profit-taking set in again to limit gains.

Uniqlo parent firm Fast Retailing eked out a 0.1% gain, while Toyota Motor erased earlier gains to finish 0.2% down.

Chip-making equipment giant Tokyo Electron, meanwhile, held onto gains, rising 3.4%.

Technology-related stocks received a tailwind from their U.S. peers as the AI frenzy continued to boost the U.S. semiconductors index.

Chip-testing equipment maker Lasertec gained 1.9%, while Sumco Corp, which produces silicon used for semiconductor manufacturers, was the best performer, rising 4.4%.

Along with profit-taking, the index’s gains were also capped as the risk of currency intervention lingered, with the yen continuing to trade around 151.72 per dollar JPY=.

That’s created a “heightened sense of caution” in the market, 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.”

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.

The intervention risk could make it difficult for the index to keep in the 40,000-point range for now, although it could get another boost when corporate earnings season gets into swing later this month, Ichikawa said.

The broader Topix closed down 0.25% at 2714.45.