Japan’s Nikkei share average jumped on Monday to its highest in more than seven months, supported by Wall Street’s gains at the end of last week, and as upbeat corporate earnings lifted risk appetite and prompted investors to scoop up beaten-down stocks.
The Nikkei rose 1.14% to 28,871.78, extending gains to a second session, while the broader Topix advanced 0.6% to 1,984.96.
Wall Street closed higher on Friday, as signs that inflation may have peaked in July increased investor confidence a bull market could be underway and spurred the S&P 500 and the Nasdaq to post their fourth straight weekly gain.
“There was optimism in the U.S. equities market in the previous session. That has promoted investors to make bets on stocks that had been sold off but reported strong earnings,” said Ikuo Mitsui, a fund manager at Aizawa Securities.
Investors appeared to show scant response to data that signalled Japan’s economy rebounded at a slower-than-expected pace in the second quarter from a COVID-induced slump. “Investors are now trying to gauge whether the market has recovered, or there would be another retreat. But today it seems they are making positive bets.”
Shares of Pan Pacific International Holdings surged 11.48% after the operator of discount store Don Quijote raised its annual profit forecast.
Drugstore chains also traded higher, with Matsukiyococokara rising 5.64% after the company reported gains in its quarterly profit and announced a share buyback.
Peer Sundrug jumped 10.77% after increasing its dividend payout forecast.
Daiichi Sankyo surged 14.52% after U.S. drugmaker Seagen said an arbitrator had ruled in favour of the Japanese drugmaker over an agreement between the two companies for using its drug technology.
Daiichi Sankyo was the second largest boost to the Nikkei, after technology investor SoftBank Group, which rose 5.17%.
Uniqlo clothing store owner Fast Retailing climbed 0.92%. Among losers, shares of Snow Peak tanked 14.8% after the camping gear retailer cut its annual profit forecast. (Reporting by Junko Fujita; Editing by Sherry Jacob-Phillips and Subhranshu Sahu)