Stocks rose Tuesday, buoyed by brisk purchases on the back of a weakening by the yen against the dollar.
The Nikkei 225 average climbed 347.57 points, or 2.57 percent, to end at the day’s high of 13,867.00. On Monday, the key market gauge sagged 95.76 points. The Topix closed 22.53 points, or 1.99 percent, higher at 1,157.15 after falling 6.29 points the previous day.
Stocks drew buybacks from the outset thanks to a halt in the yen’s strengthening against the dollar.
Investors also took heart from a newspaper report Tuesday that Prime Minister Shinzo Abe has directed ministries to consider lowering the effective corporate tax rate, brokers said.
After the initial buying ran its course, however, the market’s upside was limited in the absence of fresh trading incentives, with many market participants away from the market for summer holidays.
The key indexes were stuck in a stalemate in early afternoon trading but resumed their upswing in the middle of the afternoon, backed by speculative futures-led purchases after the dollar’s rise above ¥97.50, brokers said.
Stocks here were also helped by strong performances of Asian equity markets, brokers said.
As for the media report on a possible corporate tax cut, analysts agreed that it worked as a positive incentive for the market.
A tax reduction would strengthen the competitive power of Japanese companies and encourage more overseas companies to do business in Japan, an official at a bank-affiliated brokerage said.
Still, “uncertainty remains over whether such a tax cut will be implemented,” said Kenichi Hirano, an adviser and market analyst at Tachibana Securities Co. “Moreover, even if a corporate tax cut is decided, Japanese stocks will find it difficult to test their upside unless the government goes ahead with the planned consumption tax increase,” aimed at fiscal reconstruction.
JGBs end higher
Japanese government bonds recouped earlier losses rise Tuesday, with the key 10-year yield hitting another three-month low at one point.
The yield on the latest 329th 10-year issue with a 0.8 percent coupon was at 0.735 percent in late interdealer trading after briefly touching 0.730 percent, its lowest since May 13. The yield was at 0.745 percent late Monday.