Buoyed by gains in overseas markets, stocks staged a sharp rebound Tuesday and the Nikkei 225 average hit a six-week closing high.
The Nikkei gained 363.56 points, or 2.58 percent, to close at 14,472.90, its highest finish since May 24. On Monday, the key market gauge tumbled 200.63 points. The Topix jumped 24.31 points, or 2.07 percent, to end at 1,196.89, its highest finish since May 22. The index dropped 16.00 points Monday.
The market got off to a solid start on the heels of rises in European and U.S. stocks Monday amid receding concerns over political turmoil in Portugal.
After retreating on profit-taking, stocks regained upward momentum, helped by steady moves of Chinese stocks, brokers said.
The Nikkei gradually extended gains in the afternoon, led by index futures.
A higher than expected Chinese consumer price index for June released in the middle of the morning and a positive start of the Shanghai market lessened wariness over the course of the Chinese economy, brokers said.
The Nikkei closed at its session high, boosted by sharp gains in heavily weighted components such as clothing retailer Fast Retailing and telecommunications carrier KDDI.
But the key market yardstick failed to top Monday’s intraday high of 14,497.65, partly due to concerns about overheating, analysts said.
Toshiyuki Kanayama, market analyst at Monex Inc.’s financial intelligence department, said the Nikkei is more than 8 percent higher than its 25-day moving average, noting that their gap had widened to more than 10 percent just before the sell-offs in late May. Generally, a divergence of more than 5 percent is considered to be a sign of the market being overbought.
“Due to a strong feeling of overheating, any trigger could prompt massive selling,” Kanayama said.
Rising issues overwhelmed falling ones 1,446 to 196 in the first section, while 71 issues were unchanged. Volume fell to 2.834 billion shares from Monday’s 3.264 billion.
JGBs have good day
Japanese government bonds turned higher Tuesday, aided by a rise in U.S. Treasuries prices overnight.
In late interdealer trading in cash JGBs, the yield on the latest 329th 10-year issue with a 0.8 percent coupon stood at 0.870 percent, down from 0.880 percent late Monday.