Tokyo stocks gained further ground Tuesday on continued expectations of the U.S. stimulus package’s smooth passage through Congress.
The 225-issue Nikkei average of selected issues listed on the first section of the Tokyo Stock Exchange rose 117.43 points, or 0.40%, to close at 29,505.93, extending its winning streak to a third market day after soaring 609.31 points Monday.
The Topix index of all first-section issues ended 1.59 points, or 0.08%, higher at 1,925.54 in its three-day advance, following a 33.00-point jump the previous day.
The Tokyo market got off to a firmer start after all three major U.S. market indicators, including the Dow Jones industrial average, marked record closing highs Monday, reflecting unabated hopes that U.S. President Joe Biden’s $1.9 trillion coronavirus relief package will smoothly get congressional approval.
But profit-taking pressure quickly built up as investor concerns over a rapid market rise grew the day after both the Nikkei and Topix indexes rewrote their respective 30-year highs, brokers said.
The yen’s strengthening against the dollar also weighed down the market.
The Nikkei, however, shrugged off the downward pressure thanks to active purchases of heavily weighted component stocks such as SoftBank Group, which logged a record net profit for the April-December period the previous day.
The Topix remained in negative terrain for most of the afternoon session.
“Many investors’ hesitance to buy up after the record-breaking market advance and ahead of earnings releases by Toyota and other firms let short-term players move to take profits,” said Hirohumi Yamamoto, strategist at Toyo Securities Co.
Meanwhile, Kazuo Kamitani, strategist at Nomura Securities Co., ruled out a possible sell-off, noting that rosier business prospects and falling coronavirus cases in Japan would help investors keep buying the dip.
On the TSE first section, decliners outnumbered gainers 1,160 to 933 despite the rises in the price indicators, while 98 issues were unchanged. Volume slid to 1.469 billion shares from Monday’s 1.585 billion shares.
Among major Nikkei components, technology investor SoftBank Group climbed 3.41% and clothing store chain Fast Retailing rose 1.60%.
Cryptocurrency-related issues such as online brokerage Monex Group and information technology service company GMO Internet attracted buying thanks to a jump in the price of bitcoin.
Electronic parts producer TDK and job information service provider Recruit Holdings were upbeat as well.
On the other hand, drugmakers broadly suffered losses, with Sumitomo Dainippon Pharma tumbling 8.20%.
The stronger yen dealt a blow to Honda Motor and other export-oriented names.
In index futures trading on the Osaka Exchange, the key March contract on the Nikkei average rose 90 points to end at 29,500.
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