Timid Start For Tokyo Shares Despite Wall Street Gains

UPDATES index values, ADDS analyst comment, share prices, forex

Tokyo stocks opened down Tuesday despite overnight rallies on Wall Street as investors eyed the spread of Covid-19 in China.

The benchmark Nikkei 225 index was down 0.50 percent, or 136.07 points, at 26,865.45 in morning trade, while the broader Topix index slipped 0.45 percent or 8.60 points to 1,885.97.

Some investors sold shares to cut their losses after sharp drops in recent days, but analysts said the market was generally well supported as investors cheered healthy gains in US markets driven by banking and tech shares.

Concerns remain over the spread of Covid-19 in China, with fears that Beijing may resort to robust containment steps, said Taylor Nugent of National Australia Bank.

“On the other hand, there was also news that China plans additional support for the economy,” he added in a note.

Market sentiment was also boosted after US President Joe Biden — in Tokyo for a summit with Japan, Australia and India — said he was considering removing some of the punitive import duties enacted on China by predecessor Donald Trump.

“Tokyo shares today appear well supported,” Okasan Online Securities said. “Investors are comforted after blue-chip issues like Apple and Microsoft surged overnight.”

Depending on upcoming earnings announcements from US firms, particularly retail businesses, “it’s possible that excessive caution (about the US economy) might ease,” the brokerage added.

Nintendo lost 0.69 percent to 59,400 yen. SoftBank Group fell 0.87 percent to 5,230 yen, and Uniqlo operator Fast Retailing fell 0.89 percent to 59,910 yen.

Banking shares gained after their Wall Street peers rallied. Mitsubishi UFJ Financial Group rose 1.87 percent to 747.6 yen.

Shipping firm Nippon Yusen added 1.46 percent to 10,390 yen. Air carrier ANA Holdings added 0.30 percent to 2,518.5 yen and Japan Airlines rose 0.98 percent to 2,267 yen.