TOKYO, Oct 22 (Reuters) – Japan’s Nikkei share average pulled back from an all-time peak on Wednesday, as investors took profits following two days of strong gains on expectations of fiscal stimulus under the country’s new prime minister.
The Nikkei .N225slipped 0.5% to 49,077.56 by the midday trading recess, after recording an all-time closing high on Tuesday, when it also notched an intraday record peak of 49,945.95.
The index was mostly pulled lower by tech stocks, following declines for Wall Street peers overnight. Heavily weighted startup investor SoftBank Group 9984.T slid 5.2%
The broader Topix .TOPX, by contrast, rose 0.3% to 3,260.15, edging back towards the previous day’s record high of 3,274.06.
The big winners were automakers, following a sharp drop in the yen to as low as 152.18 per dollar JPY= on Tuesday. A weaker Japanese currency buoys the value of overseas revenues.
U.S. peer General Motors GM.N provided an additional tailwind, raising its profit outlook overnight and sending its shares surging 15%.
Toyota Motor 7203.T climbed 3%, and the Tokyo Stock Exchange’s transport equipment sub-index .ITEQP.T gained 2.6% to be the best performer among the bourse’s 33 industry groupings.
Fiscal and monetary dove Sanae Takaichi was confirmed as Japan’s first female premier on Tuesday.
Global money managers are circling back to Japan’s stock and debt markets, drawn by hopes of reflationist government policies, as well as a desire to diversify from pricier U.S. and European markets.
However, with the Nikkei failing to break above the psychologically important 50,000 barrier on Tuesday, and the new government unlikely to add to already bullish market expectations, a pullback as far as 47,000 would “not be surprising” in the short term, said Yunosuke Ikeda, head of macro research at Nomura Securities.
“Of course, Takaichi’s stance on macro policy is quite supportive for the equity market, but at this level, the Nikkei looks heavy,” he said.
“We still have some uncertainties regarding U.S.-Japan and U.S.-China trade negotiations, so profit taking can continue.”
Japan’s debt market lacked any clear sense of direction on Wednesday, with 10-year Japanese government bond yields JP10YTN=JBTCeasing 0.5 basis point (bp) to 1.65%, keeping within this week’s tight range.
The 20-year yield JP20YTN=JBTC declined 1.5 bps to 2.62%, while the 30-year yield JP30YTN=JBTC rose 1 bp to 3.135%.
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