Japan stocks facing tug of war between recovery hopes and negative news

THE Japanese stock market is facing a tug-of-war between optimism on the industrial sector and caution on the development of a possible fourth wave of Covid-19 infections which may delay the recovery plan for tourism-related sectors.

So far, the Nikkei 225 has been one of the best-performing indices in Asia, with its year-to-date performance in 2021 above 7 per cent.

There seems to be a halt to its rally as the service-oriented sectors in Japan had their recovery plans delayed when the Japanese government closed their doors on overseas spectators for the upcoming Tokyo Olympics this year. This meant that expected tourism revenue from the event would be greatly diminished with only locals contributing to them during the event.