Tokyo stocks closed higher on Tuesday, following gains in the overnight U.S. stock market, although profit-taking limited the rise in later trading. The benchmark Nikkei 225 index of Tokyo stocks ended the day up 379.67 points, or 1 percent, closing at 38,482.11.
Market analysts noted that the initial buying momentum in Tokyo stocks was spurred by the positive performance of U.S. stocks overnight. This led to widespread buying in Tokyo stocks early in the session. However, the upward momentum was tempered by profit-taking and selling from investors looking to capitalize on the rebound.
Despite the gains, political uncertainties in Europe remain a lingering concern for investors in Tokyo stocks. Analysts characterized Tuesday’s rise as largely a technical rebound rather than a sustained upward trend. These uncertainties in Europe, including potential economic instability and geopolitical tensions, have made investors cautious.
Overseas investors might also be hesitant to make significant moves in Japanese stocks ahead of the Bank of Japan’s next monetary policy meeting at the end of July. During this meeting, discussions on policy normalization are expected, which could impact market sentiment. The anticipation of potential changes in monetary policy, such as adjustments to interest rates or other financial measures, is causing investors to adopt a wait-and-see approach.
The broader Topix index also ended higher, gaining 15.75 points, or 0.58 percent, to close at 2,715.76. Advancing issues outnumbered declining ones by 1,178 to 418, with 50 issues remaining unchanged. This broad-based gain reflects overall positive sentiment in the market despite underlying caution.
Among the notable gainers were TDK, Nintendo, and Mitsubishi Heavy Industries, reflecting strong investor interest in these companies due to their robust financial performance and growth prospects. On the other hand, Takeda Pharmaceutical, Daiichi Sankyo, and Seven & i Holdings saw declines, possibly due to profit-taking or specific company-related news impacting investor confidence.
Overall, the Tokyo stock market showed resilience, bolstered by the positive cues from the U.S. market, while remaining cautious due to ongoing global uncertainties and upcoming domestic policy decisions. Investors will be closely watching the Bank of Japan’s policy meeting and developments in Europe for further direction in the coming weeks. The market’s ability to sustain gains will largely depend on these external factors and their influence on investor sentiment.