Stocks managed to stay in positive territory Tuesday after the three-day weekend, extending their winning streak to a fifth session on expectations for a breakthrough in the U.S. fiscal stalemate.
The Nikkei 225 average closed up 36.80 points at 14,441.54. The broader Topix crept up 0.30 point to close at 1,197.47. The TSE was closed Monday for Sports Day.
Stocks kicked off the week on a strong note, tracking an overnight hike on Wall Street, with the Nikkei briefly retaking the 14,500 mark in early trading. On Monday, the Dow Jones industrial average extended its rally as optimism grew that U.S. congressional leaders would soon strike deals to reopen government agencies and raise the cap on the federal borrowing limit to avoid default.
But Tokyo stocks gradually cut gains after the initial buying ran its course, with selling regaining strength without fresh buying incentives amid persistent U.S default fears. Stocks also lost steam because investors moved to lock in profits after the gains last week by chiefly selling mainstay issues in a wait-and-see mood ahead of the debt ceiling deadline Thursday in Washington.
Masashi Oguchi of Mito Securities Co. said the yen’s appreciation against the dollar dragged down stocks. He also noted that with no end to the U.S. debt ceiling issue in sight, market players wouldn’t be able to increase their positions either way.
Hiroichi Nishi of SMBC Nikko Securitires Inc. said the market has begun to price in a possible U.S. agreement to avoid a default. Still, optimism can’t be warranted on the course of the market, he warned.
Players reacted little to Prime Minister Shinzo Abe’s policy speech on the first day of an extraordinary Diet session Tuesday.
Despite the Nikkei and Topix climbing, falling issues outnumbered rising ones 923 to 692 in the first section. Volume dropped to 2.005 billion shares from Friday’s 2.477 billion.
Japanese government bonds dropped Tuesday, weighed down by selling on progress in U.S. efforts to break the impasse over the government shutdown and the debt ceiling.
The lead December contract on 10-year JGBs finished down 0.13 point from Friday at 144.25. Volume decreased to 19,405 contracts from 21,338.
The yield on the latest 330th 10-year issue with a 0.8 percent coupon stood at 0.660 percent.