Stocks pulled back Thursday, weighed down by selling to cash in gains amid a sense of market overheating.
The Nikkei 225 average lost 94.21 points to close at the day’s low of 14,191.48. On Wednesday, the key market gauge climbed 105.45 points.
The Topix ended down 12.51 points at 1,181.83, also the day’s low, after rising 5.77 points the previous day.
Stocks drew buying from the outset after the Dow Jones industrial average and Germany’s DAX stock index rewrote their record closing highs for the second consecutive sessions Wednesday.
After moving in a narrow range, however, the TSE cut gains and slipped into negative territory in the afternoon, dragged down by profit-taking after the Nikkei surged more than 590 points in the previous two days, brokers said.
The key market yardstick was also hit by large-lot selling of index futures amid the yen’s strengthening against the dollar and the euro from morning levels, brokers said.
“Investors moved to sell stocks in a bid to cool down the market following recent signs of overheating,” said Masayuki Otani, chief market analyst at Securities Japan Inc.
Still, the TSE’s downside was supported by buying of heavily weighted Nikkei components, such as mobile phone carrier Softbank and robot maker Fanuc, prior to Friday’s special quotation fixing to settle May index options contracts, a brokerage official said.
Funds are expected to continue flowing into risk assets, including stocks, on the back of receding concerns over economic slowdowns in the United States and Germany, some brokers said.
JGB futures end flat
The bellwether Japanese government bond futures contract ended flat Thursday.
The June contract on 10-year JGBs stood at 144.72 at the close. Volume fell to 14,604 contracts from Wednesday’s 19,066.
In late interdealer trading in cash JGBs, the yield on the latest 328th 10-year issue with a 0.6 percent coupon stood at 0.590 percent, unchanged from late Wednesday.
The key futures contract got off to a firmer start, backed by higher U.S. Treasury securities overnight. It advanced to as high as 144.84 in midmorning as the BOJ offered Thursday to buy ¥1.2 trillion of outstanding JGBs in money market operations.