Japanese shares edge higher as hopes for economic rebound boost cyclical stocks

  • Reuters
  • Stock Market News
Japanese shares edge higher as hopes for economic rebound boost cyclical stocks
Credit: © Reuters.

TOKYO, March 3 (Reuters) - Japanese shares ended marginally higher on Wednesday, as investors picked up cyclical stocks on hopes of a quicker economic recovery from the pandemic-led recession.

However, gains were capped by worries about bond market volatility and talk of huge selling for rebalancing this month.

The Nikkei average .N225 rose 0.51% to close at 29,559.10, while the broader Topix .TOPX gained 0.51% to 1,904.54.

"With the vaccine rollouts globally, expectations for the economic normalization is growing. That is prompting investors to buy economic sensitive shares," said Norihiro Fujito, chief investment strategist at Mitsubishi UFJ Morgan Stanley (NYSE: MS ) Securities.

Iron and steel sector .ISTEL.T rose the most among 33 sector sub-indexes on the Tokyo exchange. Kobe Steel 5406.T surged 9.09%, making it the biggest gainer in Nikkei. Nippon Steel 5401.T jumped 6.76%, while JFE Holdings 5411.T soared 8.36%.

Topix Value Index .TOPXV rose 1.27% as growth-oriented shares .TOPXG lost 0.25%, led by declines in high-flying momentum shares as well as chip-related stocks, in a sign of investor caution against their lofty valuation.

Electric-motor maker Nidec 6594.T fell 3.03%, while medical portal operator M3 2413.T lost 1.72%. Chip-making machine maker Tokyo Electron 8035.T shed 1.22%.

As the Topix has risen about 35% so far in the current Japanese financial year ending on March 31, market players are getting wary the country's pension funds could sell a large amount of shares for rebalancing by the financial year-end.

Many investors are still not sure whether a sell-off in global bonds, which hit the market in recent weeks, is over, despite signs of some stability in the last few sessions.

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