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Roundup: Japan’s Nikkei Rebounds as Tech Shares Buoyed by U.S. Peers

Japan’s benchmark Nikkei stock index bounced back Wednesday snapping a four-day losing streak, with technology shares following their U.S. peers higher after a recent slump.

The 225-issue Nikkei Stock Average added 655.66 points, or 2.02 percent, from Tuesday to close the day at 33,193.99.

The broader Topix index, meanwhile, gained 44.79 points, or 1.99 percent, to finish at 2,298.60.

Dealers here noted the U.S. dollar’s sharp rise versus the yen following a slew of economic data raising prospects that the U.S. Federal Reserve will continue with its rate hike policy.

Earlier Wednesday, Japan’s top currency diplomat Masato Kanda said that an appropriate response to excess volatility in foreign exchange markets would be made following the U.S. dollar’s spike to a seven-month high, past the 144 yen mark.

His remarks came on the heels of similar warnings recently from other financial authorities, including Japanese Finance Minister Shunichi Suzuki, about rapid, one-sided moves versus the U.S. dollar recently.

This has fueled speculation that Japan may intervene into the currency market to redress the yen’s weakness versus the U.S. dollar, partly owing to a widening interest rate gap between the Bank of Japan and other major global central banks, analysts here said.

“Although the hawkish stances of the European Central Bank and the Fed are largely a given, the market is testing how weak the yen can go, so the stark difference in policy between Japan and other central bank governors can serve as a cue for yen selling,” Masahiro Yamaguchi, head of investment research at SMBC Trust Bank, was quoted as saying.

A comparatively firm yen aside, the market mood was predominantly lifted by Wall Street’s overnight rise following upbeat economic data including consumer confidence, with technology issues here surging, tracking their U.S. peers higher.

“Rises in the U.S. stock market served as a catalyst for the rebound in Japanese stocks with buying interest emerging in the aftermath of the downward trend,” Yamaguchi said.

Technology shares finding favor included chipmaking equipment maker Tokyo Electron gaining 2.7 percent, while Sony Group advanced 2.6 percent.

Nikkei’s heavyweight Fast Retailing, operator of the Uniqlo chain of clothing stores, lifted the broader market, adding 1.6 percent.

Shipping firms reversed the previous day’s gains as investors booked profits, with Nippon Yusen losing 1.1 percent, Kawasaki Kisen Kaisha sinking 6.2 percent, while Mitsui O.S.K. Lines dipped 0.7 percent.

By the close of play, securities house, air transportation and transportation equipment-linked issues comprised those that gained the most.

The turnover on the Prime Market on the third trading day of the week came to 3,903.67 billion yen (27.10 billion U.S. dollars).