Stocks wiped out early losses to close marginally higher Tuesday, partly supported by speculation that the Bank of Japan moved to buy exchange-traded funds.
The Nikkei 225 average edged up 15.64 points, or 0.08 percent, to finish at 20,664.64 after falling 124.56 points Monday.
The Topix, which covers all first-section issues on the Tokyo Stock Exchange, was up 1.58 points, or 0.10 percent, at 1,557.09. It slumped 10.59 points Monday.
The TSE opened lower after Wall Street turned down Monday following weak guidance from U.S. construction and mining equipment maker Caterpillar and chipmaker Nvidia.
But both the Nikkei and the Topix erased their early losses in the afternoon, aided by dip buying, as well as speculation of ETF purchases by the BOJ, brokers said.
“Today’s Tokyo market almost mirrored what happened in New York yesterday” in terms of the selection of shares to trade, an official of a Japanese brokerage firm said, pointing to the weakness of electronic parts and construction machinery makers.
In New York on Monday, Caterpillar and Nvidia came under heavy selling due to their earnings warnings partly reflecting the deceleration in the pace of China’s economic growth.
Ryuta Otsuka, strategist at the investment information department of Toyo Securities Co., said investors continued to refrain from making big moves in the midst of the earnings reporting season.
Market activities remained lackluster ahead of key events abroad, including the U.S. Federal Reserve’s two-day policy-setting meeting through Wednesday and ministerial-level trade talks between the United States and China on Wednesday and Thursday, brokers said.
Rising issues outnumbered falling ones 1,143 to 894 on the first section, while 89 were unchanged.
Volume came to 1.182 billion shares, against 1.065 billion Monday.
Defensive issues attracted buying amid growing concerns over the Chinese economy. Among major gainers were power supplier Tepco and beverage maker Asahi Group.
Also on the plus side were clothing retailer Fast Retailing and mobile phone carrier KDDI.
By contrast, construction machinery maker Komatsu fell by 4.56 percent and peer Hitachi Construction by 4.36 percent, following the disappointing guidance and weaker than expected quarterly earnings from Caterpillar.
Semiconductor-related names such as Tokyo Electron, Advantest and Sumco met with selling as their U.S. counterparts, including Nvidia, suffered losses overnight.
Other major losers included drugmaker Takeda and Tokai Carbon.