Stocks climbed for the third straight session Thursday thanks to broad buying following the yen’s further decline, with the Nikkei average ending at its highest level in more than 21 months.
The Nikkei 225 closed up 92.62 points, or 0.91 percent, at 10,322.98, the highest closing level since March 10 last year, a day before the Great East Japan Earthquake and tsunami devastated the northeast. The Topix meanwhile rose 6.38 points, or 0.75 percent, to end at 854.09, its highest finish since April 2.
The Nikkei topped the previous year-to-date high of 10,255.15 set March 27 at the opening of trading Thursday, as a wide range of mainstay sectors drew buying. The benchmark index extended its gains to more than 140 points at one point, led by index futures, before retreating somewhat on profit-taking by investors.
Hiroichi Nishi at SMBC Nikko Securities Inc. said hedge buying from investors who had sold call options lifted index futures, which in turn prompted arbitrage trades involving the sale of futures and purchase of cash stocks.
Trading was active as foreign players seemed to continue buying stocks on hopes for the new Liberal Democratic Party’s new administration, inaugurated Wednesday, according to brokers.
“After the Nikkei rewrote the year-to-date high, investors moved to lock in profits for now, but the index could rise further Friday,” Mitsuo Shimizu at Iwai Cosmo Securities Co. said, noting the market’s continuing positive mood.
“Individual investors have stepped up purchases of a wide range of shares, including low-priced issues, as well as stocks of real estate developers and public works-related firms,” Shimizu said, adding some domestic institutional investors are also said to have started purchasing.
Winners outnumbered losers 1,012 to 574 in the first section.
Key yield at 3-month high
Japanese government bond prices dropped further Thursday amid the stock market’s unabated strength, pushing up the key 10-year JGB yield to the highest level in around three months.
In late interdealer trading in cash JGBs, the yield on the latest 326th 10-year issue with a 0.7 percent coupon came to 0.800 percent, a level unseen since Sept. 21. The yield stood at 0.785 percent late Wednesday.
The lead March futures contract on 10-year JGBs lost 0.16 point from Wednesday to finish at 143.50. Volume rose to 34,405 contracts from 34,196.