Nikkei rises despite sharp Wall Street fall

Stocks turned higher Wednesday, supported by a bout of buybacks after the market’s slump earlier this week.

The Nikkei 225 average gained 58.41 points to close at 18,723.52. On Tuesday, the key market gauge fell 125.44 points.

The Topix finished up 0.92 point at 1,525.67 after falling 7.01 points Tuesday.

Both indexes rose for the first time in three days.

The Nikkei opened on a weak note after U.S. equities tumbled overnight. The U.S. Dow Jones industrial average lost over 300 points to end at its lowest level in about a month, as the dollar’s advance gave rise to worries about earnings at U.S. companies and speculation grew that the U.S. Federal Reserve may soon raise interest rates.

After the initial selling ran its course, the Nikkei turned higher due to buybacks and on the back of a better than expected Japanese economic indicator, brokers said.

According to Cabinet Office data released in the morning, seasonally adjusted core private-sector machinery orders in January decreased 1.7 percent from the previous month, smaller than a median estimate of a 4.1 percent drop among 24 economic research institutes surveyed by Jiji Press.

The Nikkei accelerated its upswing to briefly gain some 170 points in midafternoon trading but trimmed part of the gain toward the close because of renewed selling.

Still, the market’s downside was underpinned by expectations for purchases of exchange-traded funds by the Bank of Japan and stock buying by pension funds, an official at a bank-affiliated securities firm said.

“On top of such buying, there are a number of institutional investors” who want to buy stocks, Yoshihiko Tabei, chief analyst at Naito Securities Co., indicated.

Brokers said market players are hoping that Japanese companies will offer pay hikes in the ongoing shunto labor-management negotiations. One source noted that wage hikes will help shore up private consumption.

Meanwhile, Tabei cited investor concerns about negative impacts on the U.S. economy of the dollar’s strength reflecting expectations for an early rate hike by the Fed.

The market is keeping close tabs on the Fed’s two-day policy-setting meeting that started Tuesday, brokers said.

Rising issues outnumbered falling ones 939 to 778 on the first section, while 147 issues were unchanged.

Volume fell to 1.926 billion shares from Tuesday’s 2.137 billion.

Robot maker Fanuc, major leasing firm Orix, Japan Airlines and clothing store chain operator Fast Retailing were buoyant.

Construction firms, including Obayashi, Shimizu and Daiho, gained ground after Prime Minister Shinzo Abe said Tuesday that the government will draw up by this summer a new five-year framework to promote the reconstruction of areas damaged by the March 2011 earthquake and tsunami.

By contrast, automakers Toyota and Mazda, oil developer Inpex and mobile phone carrier SoftBank were downbeat.

FamilyMart plunged 6.89 percent as investors did not welcome Tuesday’s announcement by the major convenience store operator and retailer Uny Group Holdings that they have launched talks with the aim of integrating their operations in September 2016. Uny also came under pressure, falling 2.87 percent.

In index futures trading on the Osaka Exchange, the March contract on the Nikkei average fell 20 points to end at 18,650.

Nikkei Futures

nikkeifutures.org@imediaone.com

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