Stocks staged a sharp rebound Wednesday, backed by a Wall Street rally and a halt in the yen’s appreciation.
The Nikkei 225 average climbed 171.91 points to end at 14,180.38 after briefly slipping below 14,000 for the first time since Oct. 9 on an intraday basis. On Tuesday, the key market gauge plummeted 610.66 points, or 4.18 percent, the steepest single-day point drop in some eight months.
The Topix rose 23.37 points to finish at 1,162.64 after diving 57.05 points Tuesday.
The market opened on a strong note after both the Dow Jones industrial average and the Nasdaq composite index rallied for the first time in three sessions Tuesday. Investors also took heart from a weaker yen.
Companies that announced rosy full-year earnings forecasts, such as automakers and electronics makers, attracted purchases, brokers said.
But the Nikkei gradually cut gains toward the morning close in line with the yen’s firming against other major currencies.
In early afternoon trading, the key price index briefly slipped below 14,000, weighed by unwinding of arbitrage positions, but soon rebounded into positive territory on futures-led purchases, brokers said.
The index remained buoyant for the rest of the day thanks to buybacks and buying on dips, they said.
But some analysts said they took the day’s rebound as a limited one, given the Nikkei’s 8.94 percent tumble in the past four sessions.
Hedge funds carried out “speculative selling” toward the morning close amid lingering concerns over the course of the U.S. economy and emerging economies, including China, said Ryuta Otsuka, strategist at Toyo Securities Co.’s investment information department.
“I don’t think the Nikkei will keep falling. But the market is expected to stay highly volatile until such concerns dissipate,” Otsuka said.
Yield dips below 0.6%
Japanese government bonds reversed earlier weakness to turn higher Wednesday, with the benchmark 10-year yield briefly falling below 0.6 percent for the first time in 2½ months.
The yield on the latest 332nd 10-year JGB with a 0.6 percent coupon slipped to 0.595 percent in afternoon interdealer trading, a level unseen since Nov. 14. The yield stood at 0.600 percent in late trading, still down from 0.605 percent late Tuesday.