Stocks lost ground for the second straight session Tuesday on selling amid a persistent sense of market overheating.
The Nikkei 225 average closed down 65.03 points at 15,314.41. On Monday, the key market gauge sagged 57.69 points.
The Topix lost 4.17 points to end at 1,275.70 after falling 5.37 points Monday.
The TSE came under selling pressure from the outset on the heels of falls in U.S. and European equities.
The Nikkei briefly fell more than 150 points in early morning trading, pressured by profit-taking amid a sense of overheating, which was indicated by several technical charts, brokers said.
After selling to lock in profits ran its initial course, the key indexes cut their losses thanks to purchases of undervalued shares and turned into positive territory in early afternoon trading on futures-led buying, brokers said.
Later, however, the indexes slipped back into negative territory, dragged down by some speculative futures-led selling, brokers said.
Some analysts expected that the government’s June economy watchers survey report would shore up the key indexes if they turn out to be good. When the report was released in the afternoon, however, such expectations dissipated as both the diffusion index gauging sentiment on the current economic condition and the DI on the economic outlook were worse than market forecasts.
“There has been no fresh incentive that can drive up the Nikkei to 15,500. But the market’s downside was solid above its 25-day moving average,” which stood at 15,187.71 as of Monday, said Ryuta Otsuka, strategist at Toyo Securities Co.
Investors need to confirm April-June earnings reports from key Japanese companies for clues to step up purchases, brokers said.
Falling issues outnumbered rising ones 894 to 787 on the first section, while 134 issues were unchanged.
Volume increased to 2.306 billion shares from Monday’s 1.681 billion.
The firmer yen dampened export-oriented names. Among them were automakers Toyota and Honda as well as electronics manufacturers Hitachi, Sony and Panasonic.
Paper manufacturer Rengo plunged 3.26 percent after a foreign brokerage firm revised down its stock prices target on the company, brokers said.
Other losers included insurer Dai-ichi Life and brokerage firms Nomura and Daiwa.
On the other hand, airlines JAL and ANA Holdings firmed along with drugmakers Daiichi Sankyo and Astellas.
Also on the plus side were camera maker Canon, trading house Mitsui and retailer Seven & I Holdings.