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Japan’s Nikkei slips as investors seize profits after 2-day rise

June 4, 2024

Key points:

  • Nikkei falls 0.45% to 38,749.25 after approaching 39,000 points.
  • Investors take profits after two consecutive days of gains.

Japan’s Nikkei share average fell on Tuesday as profit-taking set in after Japanese equities rebounded close to the 39,000-point mark the previous day. The Nikkei declined 0.45% to 38,749.25, while the broader Topix was down 0.46% at 2785.22.

Chart showing the Nikkei 225 index performance with a slight upward trend, closing at 38,851.15 after a brief 2-day rise. Investors locked in profits as there was little new market data to act on. The chart includes moving averages and MACD indicators, reflecting a mixed sentiment influenced by limited support from Wall Street's performance. Hosted at VT Markets, a forex CFDs brokerage

Picture: Nikkei 225 seen trading at 38851.15 on the VT Markets app.

Traders capture profits as market lacks catalysts

With little new material for the market to act on, investors locked in profits following two consecutive days of gains. Japanese equities received limited support from Wall Street, where the S&P 500 and the Nasdaq edged higher in a choppy session overnight, while the Dow lost ground.

The Nikkei climbed to an all-time peak of 41,087.75 on March 22 but retreated the following month. While the benchmark index touched the 39,000 level in May and again on Monday, it has struggled to maintain this range.

The market appears to be struggling to find a new theme or driver to push it higher. The dollar/yen is no longer rising, commodity prices have peaked, and inflation expectations globally are down.

Also read: Bank of Japan (BOJ) open to act on excessive Japanese yen decline

Yen’s 34-year low spurs speculation on Bank of Japan’s rate hike timing

Although the dollar/yen appears largely range-bound for now, the yen sitting at a 34-year low has fuelled bets for the Bank of Japan to hike interest rates sooner this year, perhaps as early as July. This uncertainty makes investors hesitant.

Despite the recent dip, the Nikkei remains up 16.3% for the year so far, with analysts forecasting it will trade at 40,750 by the end of this year.

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