Stocks rose Tuesday, boosted by purchases following Wall Street’s advance, but their upside was capped by profit-taking and selling on a rally.
The Nikkei 225 average closed 98.34 points higher at 15,395.16. On Monday, the key market gauge climbed 132.78 points.
The Topix climbed 8.22 points to end at 1,273.68 after rising 10.27 points Monday.
Stocks opened on a firm note after the Dow Jones industrial average ended above 17,000 for the first time in a week, reflecting better than expected April-June earnings at Citigroup, brokers said.
Buying spread to mainstay issues, such as major automakers and big banks, as well as small- and medium-cap issues.
The Nikkei extended gains to top 15,400 briefly thanks to futures-led purchases, brokers said.
In the absence of fresh incentives, however, the TSE’s upside was weighed down as investors cashed in gains and sold into a rally, brokers said.
The market was little affected by the Bank of Japan’s decision to keep its monetary policy intact at its two-day policy-setting meeting that ended Tuesday, brokers said.
Citigroup’s strong earnings report “fueled expectations that the U.S. economy has been gaining momentum and the dollar will strengthen further against the yen,” said Hiroichi Nishi, equity general manager at SMBC Nikko Securities Inc.
Still, active trading was held back prior to U.S. Federal Reserve Chairwoman Janet Yellen’s congressional testimony later Tuesday. Investors wanted to hear her remarks on the Fed’s exit strategy, brokers said.
“Trading volume and value have been low. If both of them increase, the Nikkei may get on a track that would eventually lead it above last year’s highest level,” which stood at around 16,300, Nishi said.
But an official at a midsize brokerage said powerful incentives, such as a sharp fall of the yen against the dollar, would be necessary to drive up the Nikkei above 15,500.
Rising issues outnumbered falling ones 1,108 to 548 in the first section, while 159 issues were unchanged.
Volume increased to 2.092 billion shares from Monday’s 1.926 billion.
Financial names were buoyant, inspired by the robust Citigroup earnings. Among them were megabank groups Mitsubishi UFJ and Sumitomo Mitsui as well as insurers Dai-ichi Life and Tokio Marine.
Nonbank lender Aiful jumped 7.74 percent on investor belief that the issue is bottoming out after the recent drops, brokers said.
Bridgestone soared 3.36 percent amid growing expectations that the tire maker will raise its half-year earnings report, brokers said.
On the other hand, trading houses Mitsubishi and Sojitz, robot maker Fanuc and brokerage firm Nomura were downbeat.
Oil distributor JX Holdings and mobile game site operator Gree also slumped.