Japan’s Nikkei Backpedals as Yen Intervention Risks Weigh (Update 1)

Reuters

12:02 JST, June 27, 2024 (updated at 16:00 JST)

TOKYO, June 27 (Reuters) – Japan’s Nikkei share average fell on Thursday, giving up much 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 closed down 0.82% at 39,341.54.

Technology shares underperformed to drag on the benchmark index after a sell-off in U.S. chipmaker Micron Technology in after-hours trading soured the mood.

The broader Topix slid 0.33% to 2793.70, with a sub-index of growth shares sliding 0.6%, compared with a 0.08% decline for value shares.

Risk events loom for investors in all asset classes, including a U.S. presidential debate later in the day, and the release of the Federal Reserve’s preferred inflation gauge on Friday.

The yen was last at 160.36 per dollar, after touching 160.88 overnight for the first time in 38 years. A plunge to 160.245 in late April triggered an official Japanese currency intervention worth about 9.8 trillion yen ($61.08 billion).

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 (way),” 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.

In individual stocks, chip-making equipment heavyweight Tokyo Electron slid 2.4% to become the biggest weight on the Nikkei, followed by Uniqlo parent company Fast Retailing , down nearly 2%.

At the bottom of percentage losers was chip-related firm Screen Holdings, which tumbled 5.7%.

$1 = 160.4400 yen