Nikkei slumps on month-end selling, fears over retail volatility

TOKYO, Jan 29 (Reuters) - Japanese shares tumbled for a second day on Friday, giving up early gains, as a boost from technology companies reporting upbeat earnings was overshadowed by investors’ profit-taking and rebalancing at the end of month.

Investors grew nervous about further market turbulences as retail trading frenzy boosts market volatility and talk of more position unwinding by damaged players.

Japan’s Nikkei share average fell 1.89% to 27,663.39, marking its biggest fall since July 31 and slipping below its 25-day moving average price. The broader Topix dropped 1.64% to 1,808.78.

The losses accelerated after Citron Research, a short-selling hedge fund caught in the short-squeezing of Gamestop shares, said it will make a major announcement later in the day.

Recent gainers such as Canon fell 7.4% even as the maker of camera and printer announced a solid earnings growth in the last quarter as expected.

Chip-related firms that announced robust earnings also fell.

Advantest fell 1.9%, erasing earlier gains of 5.1% after the company raised its profit forecast for the year ending in March, citing strong demand for its chip-testing machines.

Tokyo Electron slipped 4.9%, reversing gains of 2.4% after the chip manufacturing machine maker hiked its annual guidance.

“It appears pension funds are reducing their positions as they change their allocation at the end of month,” said a trader at a Japanese brokerage.

However, some companies managed to maintain their share gains after reporting strong results. Among tech stocks, Fujitsu gained 1.5% and Shinko Electric rose 7.2%.

Nomura Real Estate rose 6.7% and Oriental Land gained 1.3% following results which showed a stronger-than-expected recovery of the Tokyo Disney Resort.

JCR Pharma extended gains to a third day, rising 10.8%, as its upbeat earnings on Thursday added to the bullish mood spurred by the news that AstraZeneca will license the firm to produce some 90 million doses of its COVID-19 vaccine.

Reporting by Hideyuki Sano; Editing by Amy Caren Daniel