Stocks gained further ground on the Tokyo Stock Exchange Friday, as investors welcomed the European Central Bank’s stronger-than-expected monetary easing measures.
The 225-issue Nikkei average climbed 86.52 points, or 0.51 percent, to end at 16,938.87. On Thursday, the key market gauge climbed 210.15 points.
The Topix index of all first-section issues gained 7.15 points, or 0.53 percent, to 1,359.32, after rising 19.84 points the previous day.
In the morning, the Tokyo market was dragged down by selling, with investor sentiment hurt after ECB President Mario Draghi said Thursday that he does not anticipate future interest rate cuts. He was speaking at a news conference after the ECB, as widely expected, decided to take additional easing steps at a policy meeting that ended the same day.
But after briefly sinking more than 270 points, the Nikkei average steadily cut the losses. The Nikkei popped up into positive territory and recovered the 17,000 line in midafternoon trading, as investors took heart from a rise in U.S. stock index futures on the GLOBEX 24-hour trading system, brokers said.
A second look at the ECB’s easing steps convinced investors that they are stronger than market expectations, brokers said.
“Investors were first shocked by Draghi’s remark, but later found out that the ECB’s latest easing steps were strong enough,” including an increase in its monthly asset purchase amount from €60 billion to €80 billion, said Tomoaki Fujii, head of the corporate research division at Takagi Securities Co.
There was also a sense of relief among investors after Friday’s fixing of special quotations to settle March index futures and options contracts had no major impact on stock prices, brokers said.
Still, the market’s upside was limited as investors retreated to the sidelines prior to the Bank of Japan’s two-day Policy Board meeting from Monday and the U.S. Federal Reserve’s Federal Open Market Committee meeting for two days from Tuesday, brokers said.
“Buying is expected to concentrate on small- and medium-cap issues with fresh incentives” amid a strong wait-and-see mood before the monetary policy meetings, said Yoshihiko Tabei, chief analyst at Naito Securities Co.
Rising issues outnumbered falling ones 1,295 to 533 in the TSE’s first section, while 115 issues were unchanged.
Volume increased to 2.76 billion shares from Thursday’s 1.98 billion shares.
General contractors Shimizu, Taisei and Kajima enjoyed handsome gains on hopes for an increase in public works projects following a news report that several government officials have called for a ¥10 trillion economic stimulus package.
Mega-bank groups Mitsubishi UFJ, Sumitomo Mitsui and Mizuho and steel makers Nippon Steel & Sumitomo Metal, Kobe Steel and JFE Holdings were among other major winners.
On the other hand, department store operator Takashimaya nosedived 5.20 percent, a day after Mizuho Securities revised down its investment rating and stock price target on the company, brokers said.
Mobile game site operator Gree, as well as power utilities Kansai Electric and Shikoku Electric, also logged huge losses.
In index futures trading on the Osaka Exchange, the key June contract on the Nikkei average rose 140 points to close at 16,850.