Stocks turned sharply lower Thursday, dragged down by selling to lock in profits amid growing concerns about overheating.
The Nikkei 225 average dropped 121.07 points, or 1.19 percent, to close at 10,039.33 after surging for three straight sessions. On Wednesday the key index jumped 237.39 points to reach its highest closing since March 28. The Topix fell 0.73 point, or 0.09 percent, to end at 838.61, snapping a six-day winning streak
The market came under profit-taking pressure from the outset as investors grew wary of further buying due to the concerns about overheating. Players were also satisfied with the Nikkei breaking the key 10,000 barrier for the first time in 8½ months, brokers said.
The price indicators briefly showed wild swings following the Bank of Japan’s announcement of its decision to increase monetary stimulus after the end of its two-day policy meeting in the early afternoon.
The market accelerated its downswing in late afternoon trading on the yen’s firming against other major currencies, brokers said.
The BOJ decided to add ¥10 trillion to its asset-purchase program, bringing the total to some ¥101 trillion, and review at the next policy meeting its medium- to long-term price stability goal, an effective inflation target currently set at about 1 percent.
“The results have already been factored in, including the postponement of revising the price stability goal,” said Yutaka Miura, senior technical analyst at Mizuho Securities Co.
The BOJ Policy Board meeting came after Liberal Democratic Party President Shinzo Abe, who is set to return as prime minister, asked the central bank to take aggressive easing measures and set an inflation target of 2 percent.
“Stocks seem to stay firm until the end of this year, but profit-taking pressure would build up early next year,” Miura said.
Losers outnumbered winners 801 to 752 in the first section, while 144 issues were unchanged. Volume fell to 3.743 billion shares from Wednesday’s 4.034 billion.
Japanese government bonds rallied Thursday amid growing concerns that they may have been oversold in recent sessions.
The lead March contract on 10-year JGBs ended up 0.13 point at 144.01, snapping a five-day losing streak. Turnover dwindled to 35,046 contracts from 43,394 on Wednesday.