Japan shares bounce back as upbeat earnings offset virus worries
TOKYO, Aug 2 (Reuters) - Japan's Nikkei share average bounced back on Monday from a near-seven-month low hit in the previous session, as upbeat earnings countered concerns about the fast-spreading Delta coronavirus variant, which threatens a fragile recovery in the economy.
The Nikkei .N225 rose 1.58% to 27,715.54, almost erasing losses made on Friday, when it marked its lowest close since early January. The broader Topix .TOPX gained 1.64% to 1,932.20.
Cyclical shares including shippers .ISHIP.T and steelmakers .ISTEL.T led the gains while upbeat earning results infused the market with some energy.
NEC 6701.T rose 4.5% after the electronics and IT company posted a surprise return to profits in the April-June quarter.
Autopart maker Denso 6902.T jumped 5.1%, extending its gains to a second session after reporting strong earnings.
Misumi Group 9962.T gained 8.4% to hit a record high, after the trading firm specialised in factory automation and machine parts reported brisk earnings.
With about 40% of companies having reported their earnings, operating profit grew about 240% from a year earlier, analysts at Okasan Securities wrote. Of those, 211 firms posted positive surprises, compared with 76 with negative ones, they said.
Among decliners, Kose 4922.T tumbled 11.4% after the cosmetic firm's results for April-June fell far short of market expectations.
West Japan Railway 9021.T lost 6.8% after the railway company posted disappointing earnings, underscoring the damage from the pandemic to the sector.
East Japan Railway 9020.T and Central Japan Railway 9022.T fell 2.8% and 2.3% respectively, also following their earnings.
Recovery in travel demand looks set to be delayed further as the nation's coronavirus cases are soaring at an unprecedented pace due to the spread of Delta variant.
"In the short term, the COVID-19 weighs on the market as the government expanded state of emergency and cases in Tokyo hit record high," said Takashi Hiroki, chief strategist at Monex Securities.
Reporting by Hideyuki Sano; Editing by Rashmi Aich
Disclaimer: The XM Group entities provide execution-only service and access to our Online Trading Facility, permitting a person to view and/or use the content available on or via the website, is not intended to change or expand on this, nor does it change or expand on this. Such access and use are always subject to: (i) Terms and Conditions; (ii) Risk Warnings; and (iii) Full Disclaimer. Such content is therefore provided as no more than general information. Particularly, please be aware that the contents of our Online Trading Facility are neither a solicitation, nor an offer to enter any transactions on the financial markets. Trading on any financial market involves a significant level of risk to your capital.
All material published on our Online Trading Facility is intended for educational/informational purposes only, and does not contain – nor should it be considered as containing – financial, investment tax or trading advice and recommendations; or a record of our trading prices; or an offer of, or solicitation for, a transaction in any financial instruments; or unsolicited financial promotions to you.
Any third-party content, as well as content prepared by XM, such as: opinions, news, research, analyses, prices and other information or links to third-party sites contained on this website are provided on an “as-is” basis, as general market commentary, and do not constitute investment advice. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, it would be considered as marketing communication under the relevant laws and regulations. Please ensure that you have read and understood our Notification on Non-Independent Investment. Research and Risk Warning concerning the foregoing information, which can be accessed here.