Japan's Nikkei drops from record high on chip selloff, yen intervention nerves

The Nikkei share average plunged 2% on Friday, as tech stocks tracked a selloff in Wall Street peers and the threat of currency intervention spurred profit-taking into Japan's long weekend.

The Nikkei was down 2% as of 0155 GMT, just over 30 minutes ahead of the midday recess.

Chip-making equipment giant Tokyo Electron was the biggest points drag on the index, sliding 5.65%. Smaller peer Disco was the biggest decliner, down 7.25%.

That followed a 3.47% slide for the Philadelphia SE Semiconductor Index overnight.

Japan's broader, less tech-heavy Topix declined 0.93% on Friday.

Despite the selloff, the Nikkei remains up about 1.15% this week, after surging to a record high of 42,426.77 on Thursday.

"A natural retreat following that strong three-day rally is the biggest factor behind today's move, I think," Nomura Securities equities strategist Kazuo Kamitani said.

The stronger yen due to an overnight surge that many analysts, including Kamitani, attributed to likely Japanese currency intervention "was not really having an effect" on stock prices, he said.

At the same time, "it's natural to think there could be another round of intervention during the long weekend," spurring traders to square positions, Kamitani added.

Japanese financial markets are closed on Monday for a public holiday.

Meanwhile, a decline in domestic bond yields, precipitated by a steep drop in U.S. Treasury yields, weighed on banks and other financials stocks.

Insurers were the worst performers among the Tokyo Stock Exchange's 33 industry groups, down 3.84%, followed by electric machinery, off 2.35%, and banking , falling 1.85%.

Other decliners were AI-focused startup investor SoftBank Group, down 3.69%, after announcing the acquisition of chipmaker Graphcore, and Uniqlo store operator Fast Retailing , which dropped 3.78% after releasing earnings.

7&i Holdings, the operator of 7-Eleven stores in Japan, lost 6.37% after disclosing financial results.