TOKYO, May 29: Japan’s Nikkei share average edged up in a morning choppy session on Wednesday, as investors remained unsettled after last week’s tumultuous trade pulled the index down 10 percent from a 5-1/2-year high.
The Nikkei rose 0.1 percent to 14,325.64 by the midday break after trading as high as 14,512.28 and as low as 14,243.49.
‘The Nikkei was again dragged down by selling in the futures market. This caused the benchmark to lag behind the broader Topix,’ said Hiroyuki Fukunaga, the chief executive of Investrust. ‘Yet, the overall mood isn’t bad.’
If the index were to finish the day in positive territory, it would be its first two-straight days of gains since last Thursday’s 7.3 percent slide, its biggest one-day percentage drop since the March 2011 earthquake and tsunami.
Fukunaga added that many investors are waiting to see if the yen’s weakening trend against the dollar will continue.
The yen last traded at 102.18 yen against the dollar, after hitting a session low of 102.525 earlier on Wednesday.
‘The market is going to be volatile in the next one to two weeks. But after people who want to sell off Japanese equities in the shorter term finish their selling, the market can try another high,’ said Shun Maruyama, chief Japan equity strategist at BNP Paribas.
‘Some long-only guys, some pension guys, some domestic investors, like retail investors, are still having a medium-to-long-term bullish view on Japan’s market,’ he said, adding that they were likely to buy on dips, while hedge funds were trying to offload on strength.
The benchmark is still up 16 percent since April 4, when the Bank of Japan announced a sweeping monetary expansion campaign to eradicate years of deflation and revive growth, and has risen 38 percent so far this year.
Investors continued to pick up battered names, such as Toyota Motor Corp and Canon Inc.
Toyota gained 0.5 percent and was the second-most traded stock on the main board by turnover, while Canon added 1 percent.
Financials were also in demand, with Nomura Holdings , Japan’s top brokerage, up 0.4 percent while lenders Mitsubishi UFJ Financial Group and Sumitomo Mitsui Financial Group (SMFG) added 2.1 percent and 1.2 percent, respectively.
Real estate companies took a beating, down 0.8 percent, with Sumitomo Realty & Development down 2 percent.
Index heavyweight SoftBank Corp rose 1.5 percent after a Reuters source confirmed a Wall Street Journal report that the Japanese company and Sprint Nextel Corp have reached a deal with U.S. Authorities to address any national security concerns arising from SoftBank taking control of the U.S. telecoms carrier.
As of Tuesday, the Nikkei had fallen 10 percent since hitting a 5-1/2-year high on Thursday, a day when it also later suffered the 7-plus percent dive, which has spooked investors and led to a sharp spike in volatility.
The Nikkei’s 30-day implied volatility stood at 34.8 percent on Tuesday, easing from a four-year high of 38.2 percent hit last Thursday but it remained way above the May 22 level of 26 percent, according to Thomson Reuters Datastream. That compared with some 12 percent for the U.S. S&P 500 and 16 percent for the Euro STOXX 50 index.
The broader Topix index climbed 1 percent to 1,180.09 by the midday break, with volume at 52 percent of its full daily average for the past 90 trading days. (agencies)
Trending Now
E-Paper
Follow our WhatsApp channel