The Nikkei 225 average pulled back Tuesday, dampened by selling to lock in profits after the previous day’s surge.
The key market gauge retreated 38.90 points to end at 15,611.31 after shooting up 350.35 points Monday.
But the Topix rose 1.01 points to close at 1,256.33 after rising 19.49 points the previous day.
Despite an overnight rise in U.S. equities, TSE stocks opened lower, pressured by profit-taking following the previous day’s hefty gains.
The Nikkei was stuck in a confined range for the rest of the morning session, with its downside underpinned by intermittent buying linked to index futures, brokers said.
The key market gauge continued moving narrowly in the afternoon as investors retreated to the sidelines amid worries about selling to unwind arbitrage positions before Friday’s special quotation fixing to settle December index futures and options contracts, brokers said.
The yen’s moderate drop against the euro in the afternoon lent support to the TSE, boosting the stocks of companies with high proportions of sales in Europe, such as precision equipment makers Nikon and Olympus.
Still, “overseas hedge funds refrained from purchases” as the United States was ready to adopt on Tuesday a final proposal on the so-called Volcker Rule, which bans banks’ propriety trading in high-risk financial products, said Hiroichi Nishi, equity general manager at SMBC Nikko Securities Inc.
The market lacked vigor as shown by trading volume and value, as some foreign investors have already left for the holiday season, brokers said. Buying concentrated on small- and medium-size stocks that have little impact on the key indexes, they said.
Falling issues outpaced rising ones 865 to 734 in the first section, while 168 issues were unchanged. Volume edged up to 2.142 billion shares from Monday’s 2.114 billion.
In the financial sector, bank group Sumitomo Mitsui and brokerage firms Nomura and Daiwa were downbeat.
JGBs lack direction
Japanese government bonds showed a lack of direction Tuesday in the absence of powerful trade incentives.
The lead December contract on 10-year JGBs closed up 0.01 point from Monday at 144.72 after repeating minor fluctuations. Volume dwindled to 28,119 contracts from 61,351.