TOKYO, April 21 (Reuters) - Japanese shares dropped on
Tuesday with energy-related companies taking the brunt of a
collapse in oil prices, while the virus pandemic curbed any risk
appetite ahead of corporate earnings.
The Nikkei share average .N225 fell 1.97% to 19,280.78,
slipping further from Friday's near six-week high of 19,922. The
broader Topix .TOPX lost 1.15% to 1,415.89.
The loss widened on heightened geopolitical worries after
CNN reported North Korean leader Kim Jong Un was gravely ill
though South Korean and Chinese sources cast doubt. Companies with exposure to the oil market were in focus
after oil prices grabbed headlines with the front-month May U.S
crude futures contract CLc1 turning negative overnight.
"Fall in oils prices raised concerns about more bankruptcies
in the U.S. shale oil industry. In Japan too, refiners and
resource-related companies earnings will be hit," said Masayuki
Kubota, chief strategist at Rakuten Securities.
Energy plant engineering firm JGC 1963.T dropped 6.3%
while Chiyoda Corp 6366.T fell 3.5%.
Trading houses, for which resource operations are a core
part of business, were another victim.
Mitsubishi Corp 8058.T lost 1.4% while Mitsui Co 8031.T
shed 2.3%. Itochu Corp 8001.T fell 2.0% while Marubeni
8002.T dropped 3.8% to a four-year low.
Lower oil prices offered limited comfort for companies that
would normally benefit from them, such as airlines, given the
sheer scale of demand destruction.
Japan Airlines 9201.T fell 1.6% while rival ANA Holdings
9202.T slipped 0.3% after cutting its profit estimates for the
year that ended on March 31 to 27 billion yen ($250.9 million)
from the previous estimate of 94 billion yen. Its earnings
announcement is scheduled on April 28. Cyclical shares such as semi-conductor related companies
were also under pressure as investors continued to fret over the
impact from the novel coronavirus pandemic. Nidec 6594.T
dropped 5.3%.
The index of Mothers start-up market .MTHR dropped 4.2%
after a strong bull run over the past two weeks, with on-line
flea market app operator Mercari 4385.T falling 8.7%.
On the main board, decliners outnumbered gainers by ratio of
74 to 26.
Among gainers, Takara Bio Inc 4974.T rose 10.4% after a
media report that it would build a mass production system for
the coronavirus vaccine it is developing.
Nintendo Co Ltd 7974.T gained 0.2% following a media
report the game company was considering increasing the
production of its popular "Switch" game console, demand for
which has risen after lockdowns in many countries.
Defensive shares were still in favour with food company
Meiji Holdings 2269.T rising 2.4% and toiletry goods maker Kao
Corp 4452.T gaining 1.1%.
($1 = 107.60 yen)