Stocks gained further ground Tuesday, with the Nikkei 225 average closing above 9,900 on growing hopes for economic recovery under the incoming government led by the Liberal Democratic Party.
The Nikkei closed up 94.13 points, or 0.96 percent, at 9,923.01, the highest finish since April 3.
The Topix finished up 9.01 points, or 1.12 percent, to close at 816.85, extending its winning streak to a fifth session.
Buying outpaced selling from the outset after Wall Street snapped its three-session losing streak overnight on news that U.S. President Barack Obama and Congress came closer on a deal to prevent the “fiscal cliff” yearend budget crisis.
The Nikkei gained more than 130 points by early afternoon, aided by media reports that LDP leader Shinzo Abe, who is certain to become prime minister next week, would meet with Bank of Japan Gov. Masaaki Shirakawa to seek the central bank’s cooperation for implementing more drastic measures to fight deflation and achieve recovery, brokers said, adding this news led the yen to drop again against other major currencies.
Though the topside of the market turned heavy later in the afternoon on growing caution against the fast rebound, investor sentiment has somewhat improved since the LDP’s landslide in Sunday’s election, they said.
The Nikkei climbed to the level only 32 points shy of the 10,000 threshold.
“It is highly likely that the Nikkei retakes 10,000 this week at the earliest,” said, Hiroaki Hiwada, strategist at the investment information department of Toyo Securities Co.
“The only concern at present is a sense of market overheating,” Hiroichi Nishi, equity general manager at SMBC Nikko Securities Inc., pointed out.
JGBs fall further
Japanese government bonds fell further Tuesday on the heels of higher U.S. Treasury yields, pushing up the key 10-year JGB yield to its highest level since Nov. 15.
In interdealer trading in cash JGBs, the yield on the latest 326th 10-year issue with a 0.7 percent coupon rose as high as 0.760 percent before falling back slightly to 0.755 percent, still up from 0.735 percent Monday.
In futures trading, the lead March contact on 10-year JGBs briefly fell to 143.80, the lowest level since Oct. 23, before ending at 143.99.