The bellwether Nikkei average wiped out its initial loss to turn up and retake 18,000 on the Tokyo Stock Exchange on Thursday, with the market attracting bargain hunting following its plunges earlier this week.
The 225-issue Nikkei gained 205.90 points, or 1.15 percent, to close at 18,096.90. On Wednesday, it tumbled 343.74 points.
The Topix index of all first-section issues ended up 19.89 points, or 1.35 percent, at 1,490.72 after shedding 32.30 points the previous day.
Both indexes rose for the first time in three days.
The Nikkei opened in negative territory, following Wednesday’s falls in European and U.S. equities, and the yen’s ascent against the dollar.
After the initial wave of selling ran its course, the Nikkei gradually cut its loss and snapped back onto the plus side by midmorning trading.
The Nikkei accelerated its upswing in the afternoon. Investors stepped up purchases, encouraged by the market’s resilience, brokers explained.
Tokyo stocks are now believed to be undervalued as the price-to-book ratio of TSE first-section issues has dropped after the market’s recent sharp falls, they said.
Hiroaki Hiwada, senior strategist at Toyo Securities Co.’s Investment Research Division, said that the Tokyo market was also supported by a rise in Chinese shares on Thursday reflecting growing expectations that stimulus measures will come out at a key Communist Party of China meeting slated for later this month for discussions on the country’s next five-year economic management program.
“In addition, there are hopes for the Bank of Japan to decide on additional monetary easing at its next policy-setting meeting at the end of this month,” Hiwada said.
Given a recent spate of disappointing economic indicators at home and abroad, the Japanese central bank may be forced to take further easing action at an early date, an official at another securities firm said.
But other sources warned that the market could be hit by selling if the BOJ opts to stay put at the next meeting despite growing investor hopes for additional easing.
Rising issues outnumbered falling ones 1,609 to 223 on the TSE’s first section, while 68 issues were unchanged.
Volume fell to 2.18 billion shares from Wednesday’s 2.43 billion shares.
Export-oriented names, including automaker Toyota, tire maker Bridgestone, air conditioner maker Daikin and electronics parts producer Murata Manufacturing, wiped out their early losses to end higher thanks to buybacks.
Also buoyant were drug makers Takeda and Eisai, clothing store chain operator Fast Retailing, online shopping mall operator Rakuten, mobile phone carriers SoftBank and KDDI, and megabanks Mizuho and Mitsubishi UFJ.
Sumitomo Mitsui Construction attracted buybacks, after plummeting Wednesday on news that a condominium building in Yokohama, which was constructed by the company, has tilted.
By contrast, automaker Mazda, and electronics makers Sharp and Panasonic were downbeat.
Asahi Kasei plunged following its announcement that a subsidiary of the chemical maker undertook piling work for the tilted Yokohama condominium building as a subcontractor. Asahi Kasei stock ended down 13.62 percent on Thursday and was thus the biggest loser on the TSE first section.
In index futures trading on the Osaka Exchange, the key December contract on the Nikkei average was up 160 points at 18,100.