Japan's blue-chip stock index has in May suffered its two sharpest sell-offs for the year and its high volatility is fueling concern about a spill over into other major markets.
The Nikkei stock index tumbled over 5 percent on Thursday to its lowest level in a month, knocked down by a strong yen and a fresh bout of profit taking on this year's double-digit gains.
(Read More: If Foreigners Are Net Buyers, Who's Selling?)
Equity markets in Europe and the U.S. shrugged off the Nikkei's slide to close higher, but strategists say they're not so sure how long they will stand up.
"I don't know how much longer the U.S. markets can hold off [Japan volatility] and I was surprised we didn't open lower [Thursday]," said Mike Crofton, CEO at the Philadelphia Trust Company. "The market is obsessed with the Fed [Federal Reserve] and whether or not it will take its foot off the pedal and so we opened higher on the U.S. economic data," he said, offering a reason why markets had been able to withstand the Nikkei tumble.
Data on Thursday showing an unexpected rise in weekly jobless claims and the U.S. economy growing at a 2.4 percent annual rate in the first quarter, slightly short of estimates for a 2.5 percent gain, eased worries that the U.S. Federal Reserve could start taking back its monetary stimulus soon.