Nikkei surges to 26-year high on strong corporate earnings

Stocks soared Tuesday, lifting the Nikkei 225 average to its highest close in almost 26 years.

The Nikkei spiraled upward 389.25 points, or 1.73 percent, to end at 22,937.60, a level unseen since Jan. 9, 1992. The key market gauge also marked the best finish since the collapse of the bubble economy in the early 1990s.

The Topix, which covers all first-section issues on the Tokyo Stock Exchange, 20.63 points, or 1.15 percent, higher at 1,813.29, the best since Feb. 26, 2007.

Although the market opened weaker with investor sentiment dampened by the dollar’s fall below ¥114, it soon returned to positive territory thanks to bargain hunting and went up on buying encouraged by a series of announcements of strong earnings by Japanese companies, brokers said.

After the Nikkei surpassed 22,666.80, the recovery closing high in the post-bubble market, foreign investors stepped up purchases of mainstay issues, brokers said.

Investors took heart from “good midterm earnings reports released by Japanese firms on Tuesday,” said Masahiro Ichikawa, senior strategist at Sumitomo Mitsui Asset Management Co.

Robust U.S. stocks and relatively stable dollar-yen moves around ¥114 also made players feel comfortable buying Tokyo stocks, he said.

On Monday, all three key U.S. stock price gauges — the Dow Jones industrial average, the S&P 500 index and the tech-heavy Nasdaq composite index — rewrote record closing highs for the second consecutive session.

Tomoaki Fujii, head of the investment research division at Akatsuki Securities Inc., attributed the TSE’s sharp advance to upward revisions by a number of domestic firms in their earnings estimates for the business year through next March.

But observing that the upsurge was led by vigorous futures purchases, Fujii said, “A sell-off might follow.” The market’s ascend was “too fast,” he added.

Rising issues outnumbered falling ones 1,315 to 619 on the first section, while 99 issues were unchanged.

Volume fell slightly to 1.896 billion shares from 1.938 billion Monday.

Mitsubishi Estate jumped 3.94 percent after the property developer revised up its consolidated operating profit forecast for the year ending March from ¥195 billion to ¥205 billion.

Oil companies Inpex, Japex and Idemitsu were buoyant on a further rise in crude oil prices.

By contrast, drug maker Nippon Shinyaku lost 2.64 percent as its operating profit estimate for the March 2018 term fell short of market expectations.

Also on the minus side were Kobe Steel and chipmaking equipment maker Disco.