The Nikkei 225 average ended slightly higher Wednesday, extending its winning streak to a sixth session as investors nervously awaited a deadline Thursday to raise the U.S. government’s debt limit to avoid a default.
The Nikkei closed up 25.60 points at 14,467.14, though the Topix shed 0.69 point to end lower at 1,196.78.
The TSE opened slightly lower after stocks on Wall Street fell overnight as lawmakers on Capitol Hill struggled over terms to raise the debt limit.
The market soon turned choppy, with the Nikkei fluctuating around Tuesday’s closing level amid a lack of fresh incentives.
Although the market still largely expects a deal to prevent a U.S. default, players were increasingly sitting on their hands in a wait-and-see mood ahead of the Thursday deadline, brokers said.
Still, the TSE showed resilience as the yen eased somewhat against major peers, prompting buybacks, brokers said.
Amid a dearth of market-moving factors, the Nikkei was swung mainly by heavily weighted components, brokers said.
Once a deal is struck in the U.S., it will put investors in “risk-on” mode and boost share prices around the world with a particular interest in Japanese stocks, said an official at a bank-affiliated brokerage.
Big players in the United States, such as pensions and investment trusts, will likely increase their bets on Japanese stocks, the official added.
There are lingering hopes for Japanese stocks, such as expected upbeat earnings reports due out from later this month and Prime Minister Shinzo Abe’s reflationary policies, said Yutaka Miura, senior technical analyst at Mizuho Securities Co.
Still, an upswing in Japanese stocks may be limited even if the cloud over the U.S. fiscal woes clears, Miura said. Although a debt ceiling hike is welcome, investors will be left without more trading incentives, he noted.
Falling issues outnumbered rising ones 974 to 628 in the first section, while 149 issues were unchanged. Volume dwindled to 1.777 billion shares from 2.005 billion Tuesday.
Japanese government bonds turned higher Wednesday, helped by the solid outcome of the day’s auction of new five-year government notes.
The lead December contract on 10-year JGBs finished up 0.21 point from Tuesday at 144.46. Volume rose to 21,881 contracts from Tuesday’s 19,405 contracts.