Tokyo: Shares end higher on earnings, rising US yields

[TOKYO] Japanese shares closed higher for a fourth straight session on Wednesday, helped by strong earnings from Bridgestone and other firms, while banking stocks received support from rising US bond yields.

The Nikkei share average climbed 0.65 per cent to 28,070.51, its first close above 28,000 since July 16, though it could face resistance at around 28,300 from its downward-sloping trendline since mid-June.

The broader Topix gained 0.92 per cent to 1,954.08, also hitting a high last seen in mid-July, with upbeat earnings buoying sentiment.

Bridgestone jumped 5.35 per cent on strong quarterly earnings and an upbeat annual profit outlook.

Toho Zinc, with a 12.69 per cent surge, was the biggest gainer on the Nikkei index after it raised full-year earnings projections.

Ulvac soared 6.95 per cent to a three-year high after the vacuum devices maker posted strong growth and announced a dividend hike.

Staffing service company Persol Holdings climbed 7.0 per cent on surprisingly strong quarterly profit and a dividend hike plan.

Banks gained 2.61 per cent as US bond yields rose to one-month highs after the US Senate passed a massive infrastructure Bill. Japanese bank shares are highly correlated to US yields because of their large investment in US debt.

Higher US yields also benefit Japanese shares because they tend to cheapen the yen and boost exporters' profit, though in recent years analysts have noted those relations appear to have weakened considerably.

Softbank Group dropped 1.76 per cent, failing to sustain early gains following its earnings announcement and after chief executive Masayoshi Son said it would pause Chinese investments as it waits for regulatory action against the country's tech firms to play out.

"Its earnings weren't bad but there's still uncertainty on China's regulation drives. In short, its earnings didn't produce any strong reason to sell, but there isn't a strong case to buy it either," said Masayuki Doshida, senior strategist at Rakuten Securities.

REUTERS