Last week’s volatility on the Tokyo stock market was largely technical. The catalyst for the fall was the reshuffle of the 225-issue Nikkei average.

The April 15 Nihon Keizai Shimbun announcement on the replacement of 30 of the 225 components of the key market gauge triggered selloffs of the outgoing issues. The reshuffle took effect Monday.

The imminent reshuffle prompted index fund managers to reshuffle their portfolios, sending the market reeling along a broad front. As of April 14, the combined value of the 30 new constituents stood at 148,672 yen, far larger than the combined value of the outgoing issues — 7,819 yen.

Many managers of funds linked to the Nikkei index had no choice but to sell off some of the 195 remaining stocks as well, to bring their funds in line with the new index.

The Nikkei average closed last week at 18,252, stopping far short of the theoretical value of the new index — 21,748. The gap may have left the market with room to rise in the near term.

With uncertainty about the impact of the Nikkei reshuffle out of the way, investors are beginning to turn their attention to normal determinants, including corporate earnings reports for the year to March.

When investors confirm good news on earnings for fiscal 1999, a broad array of stocks could rebound strongly.

With New York stocks locked in a crosscurrent between fears of higher interest rates and expectations of favorable corporate earnings and economic prospects, daily market activity has been influenced by a handful of technology issues that still stand at precariously high levels.

The technology-heavy Nasdaq composite index hit a new peak of 5,048.62 on March 10 but sank below 3,500 earlier this week, meaning selling pressure on technology issues could soon subside.

The market is now trying to assess whether the U.S. Federal Reserve will raise interest rates further at the Federal Open Market Committee meeting set for May 16.

Although volatility may be inevitable on Wall Street for some time, the market should soon leave fears of higher interest rates behind.