Japan's Nikkei slumps on earnings, profit-taking
Updates with closing levels
By Brigid Riley
TOKYO, May 8 (Reuters) -Japan's Nikkei share average fell more than 1% on Wednesday, slipping from multi-week highs hit in the previous session as earnings releases drew the starkest winners and losers, while investors awaited fresh cluesto determine the U.S. interest rate path.
The Nikkei .N225 closed 1.6% lower at 38,202.37, shedding 632.73 points to wipe out Tuesday's gains.
The broader Topix <.TOPX> was down1.45% at 2706.43.
The benchmark index rallied to a three-week high on Tuesday asa downside surprise in U.S. job growth reassured markets that rate cuts may still be on theFederal Reserve's cards this year.
However, U.S. stock markets meandered overnight due to a lack of new clues to confirm the timing and size of potential cuts, giving Japan's Nikkei little momentum to go on. .N
"The timing of U.S. interest rate cuts will greatly impact Japanese stocks," said Masahiro Ichikawa, chief market strategist at Sumitomo Mitsui DS Asset Management.
If U.S. inflationsettles down and the chance of rate cuts increases, Japanese equities will follow Wall Street higher, he said.
"I think it's highly likely that the Nikkei will approach 39,000 or 40,000 again by the year-end."
The index rose to an all-time high of 41,087.75 earlier this year before retreating sharply in April.
A drag in U.S. technology shares on Tuesday also generated some headwinds for Japanese shares.
Chip-making equipment giant Tokyo Electron 8035.T slipped 1.5%, while AI-focused startup investor SoftBank Group 9984.T fell 1.7%.
With little news on the policy front to drive the market on Wednesday, corporateearnings and profit-taking dominated market moves.
Shares ofNintendo 7974.T declined 5.4%after the gaming company said it plans to make an announcement about the successor to its Switch console, while Mitsubishi Heavy Industries 7011.T slumped 7.3%.
Automaker Toyota Motor 7203.T pared losses, declining0.6%, after posting a record-breaking quarterlyoperating profit.
Uniqlo parent firm Fast Retailing 9983.T slumped 2.3, after news of increased domestic sales in April compared with the previous year saw the share up 3.2% on Tuesday.
Reporting by Brigid Riley; Editing by Sohini Goswami and Sonia Cheema
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