TOKYO, May 28: Japan’s Nikkei share average edged higher on Tuesday morning, regaining a degree of stability following extreme volatility in recent days, as some investors picked up battered stocks, including blue-chips Toyota Motor Corp and Sony Corp.
Sentiment, however, remained fragile after last week’s turbulent traded raised doubt about the sustainability of the remarkable bull-run that has taken the index to a 5-1/2-year high.
The Nikkei was up 0.6 percent at 14,223.39 by the midday break after dropping as much as 1.4 percent to below 14,000 in the opening minutes. It skidded 3.2 percent in the previous session.
‘The period of super volatility when the market was driven by the futures seems to be over,’ said Mitsushige Akino, executive director and chief fund manager at Ichiyoshi Asset Management.
‘In my opinion, the Nikkei has been pulled back to an appropriate level based on economic fundamentals. I think the index will hover around 14,000 until there is a change in the fundamentals.’
The Nikkei plunged 7.3 percent last Thursday, its biggest single-day percentage loss since the March 2011 earthquake and tsunami. The selloff was triggered by worries the U.S. Federal Reserve will scale back its stimulus this year and weak factory activity data from China, Japan’s second-biggest export market.
The gyrations in the market were also exacerbated by a rebound in the yen, driven by safe-haven bids and as some investors pared back their yen-selling positions to cover losses in equities. The Japanese currency pulled back on Tuesday, with the dollar advancing 0.8 percent to 101.75 yen, up more than a full yen from two-a week low of 100.66 hit on Friday.
‘It (selling of stocks) has been overdone to be quite honest. For the most part in the last couple of days, we have been better sellers in the index in terms of call spread,’ a senior dealer at a foreign bank said.
‘It has not shaken real money out of the market,’ he added.
Toyota advanced 3.2 percent and was the second-most traded on the main board by turnover, while peers Mazda Motor Corp , Mitsubishi Motors Corp and Isuzu Motors Ltd were up between 3.2 and 9.5 percent.
Sony, which was also heavily traded, gained 1 percent.
While the recent tumult has spooked investors, the benchmark Nikkei is still up 37 percent this year, and has gained nearly 13 percent since April 4, when the Bank of Japan announced a sweeping monetary expansion campaign to beat back years of deflation and revive growth.
The broader Topix index added 0.4 percent to 1,158.77.
Real estate companies remained under pressure, with the sector sub-index dropping 3.7 percent. (agencies)
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