Tokyo: Nikkei tracks global peers higher, but virus woes undermine mood

[TOKYO] Japanese shares ended higher on Monday, catching the tailwind from a bounce in global peers on positive corporate earnings, though gains were curbed by concerns that domestic Covid-19 infections could further dampen the country's economic recovery.

Nikkei average rose as much as 1.77 per cent in early trade after a four-day weekend that marked the opening of Tokyo Olympics, before shedding a part of the gains to close 1.04 per cent higher at 27,833.29.

The broader Topix closed 1.11 per cent higher at 1,925.62, after having risen 1.74 per cent earlier in the session. During the long weekend in Japan, all three major US stock indices closed at record highs.

"The market was strong during the US and European trades. As soon as Tokyo opened, it turned softer, which underscores the cautious mood here. With coronavirus cases rising, investors sell into rallies rather than bidding up," Tomoichiro Kubota, a senior market analyst at Matsui Securities said.

Tokyo reported 1,763 cases on Sunday, up 75 per cent from a week ago.

Nidec fell 3.2 per cent as some investors were disappointed after the motor maker failed to upgrade its annual profit outlook despite the solid rise in quarterly profit.

"The results were pretty good, but its share reaction suggests shares that have very high investor expectations may have hard time advancing gains," Mr Kubota said.

Elsewhere, Tokyo Steel Manufacturing jumped 9.3 per cent after the company boosted earnings forecast sharply.

That helped to boost other steelmakers' shares, with industry leader Nippon Steel up 3.7 per cent.

Toray gained 5.2 per cent after Nikkei business daily reported that the chemical company's quarterly profit had likely soared. The firm will announce its earnings next week.

Morito, a trading company that has skateboard-related items in its lineup of goods, jumped 11.9 per cent after two Japanese skateboarders won gold medals at the Olympics.

SoftBank Group bucked the trend to fall 2.1 per cent, dragged lower by worries about the firm's exposure to Didi and other Chinese tech firms as China intensifies crackdown on them.

REUTERS

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