Stocks lost further ground Tuesday as investors moved to lock in profits on wariness over market overheating after the recent rapid rally.
The 225-issue Nikkei average closed down 90.95 points, or 0.86 percent, at 10,508.06. On Monday, the key market gauge fell 89.10 points.
The Topix index of all first-section issues dropped 9.18 points, or 1.04 percent, to end at 871.88, after slipping 7.45 points the previous day.
The Tokyo market opened lower as mainstay issues met with profit-taking following overnight falls in European and U.S. markets and the yen’s slight rise against the dollar.
The Nikkei average briefly recovered into positive territory in the midmorning as the yen slightly eased against other major currencies.
In the afternoon, the key index extended losses, led by index futures.
Despite Monday’s decline in the indexes, some technical indicators still signal that the Tokyo market has been overheating, brokers said.
“The market’s speed adjustment has not been completed,” said Kenichi Hirano, adviser and market analyst at Tachibana Securities Co. “I hope a sense of overheating will be reduced while the Nikkei average is moving around 10,500 for some more days,” he added.
Hopes for economic policies to be taken by the new government continue providing support for the market, brokers noted. Tokyo stocks “are unlikely to fall substantially, as there are no massive sellers,” Hirano said.
The Nikkei average was fluctuated by speculative selling of index futures ahead of the fixing of special quotation to settle January options contracts on Friday, brokers said.
Losers outnumbered winners 1,013 to 565 in the TSE’s first section, while 116 issues were unchanged. Volume edged down to 3.519 billion shares from Monday’s 3.531 billion.
JGBs stay steady
The key Japanese government bond futures contract ended little changed Tuesday.
The March contract on 10-year JGBs ended down 0.01 point from Monday at 143.43. Volume grew to 37,939 contracts from 30,295.
In late interdealer trading in cash JGBs, the yield on the latest 326th 10-year issue with a 0.7 percent coupon stood at 0.825 percent, down from 0.835 percent late Monday.