The Nikkei 225 average bounced back Wednesday to end at its highest level in about eight weeks, helped by brisk purchases of mainstay large-cap issues and futures-led buying.
The Nikkei gained a tidy 193.69 points, or 1.35 percent, to close at 14,505.36, the highest finish since July 25. On Tuesday, the key market gauge retreated 93.00 points.
The Topix climbed 11.43 points, or 0.97 percent, to end at 1,193.07, its best finish since Aug. 6. It sagged 3.64 points Tuesday.
The market opened higher after the Dow Jones industrial average hit a 1½-month closing high Tuesday, with market players increasingly believing that the U.S. Federal Reserve will shave its asset purchases by only a small margin, brokers said.
The U.S. central bank is likely to decide on the start of the tapering off at its Federal Open Market Committee meeting that was to end early Thursday Japan time.
The Nikkei accelerated its upswing as key component issues with large market capitalization, such as Toyota, drew buying on the back of stability in the foreign exchange market, brokers said.
In the early afternoon, the key index briefly rose more than 300 points, led by large-lot purchases of index futures.
But the Nikkei shed some of the gains later amid growing concerns about overheating, market sources said.
Players, especially institutional investors, were waiting to see the outcome of the Fed’s policy-setting meeting, the sources said.
Heavily weighted Nikkei components other than Toyota also advanced, among them clothing retailer Fast Retailing and industrial robot maker Fanuc. Small-cap issues with positive incentives also attracted buying interest, brokers said.
“There was no particular reason behind the market’s surge today,” said Hiroaki Hiwada, a senior strategist at Toyo Securities Co.
Japanese government bonds gained further ground Wednesday despite the surge in the Tokyo stock market, after an auction of new 20-year JGBs came off without any unexpected hitches.
The lead December futures contract on 10-year JGBs was up 0.06 point to end at 143.71. Volume increased to 19,125 contracts from Tuesday’s 16,550.
In late interdealer trading in cash JGBs, the yield on the latest 330th 10-year issue carrying a 0.8 percent coupon stood at 0.705 percent.