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Nikkei snaps 4 days of losses but mood stays fragile; energy firms weak

Stock MarketsAug 08, 2019 09:30
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© Reuters. Nikkei snaps 4 days of losses but mood stays fragile; energy firms weak

* Nikkei takes a breather after sell-off, but Topix eases
* Chip sector gains; energy, resources & bank shares sag
* Japan Post, SMC, Bridgestone to report earnings on Friday

By Tomo Uetake
TOKYO, Aug 8 (Reuters) - Japan's Nikkei eked out small gains
on Thursday on bargain-hunting after the past week's heavy
selling, but sentiment remained frail over uncertain prospects
for a resolution to the U.S.-China trade conflict.
The benchmark Nikkei share average .N225 rose 0.37% to
20,593.35 after four straight days of losses, while the broader
Topix .TOPX retreated 0.08% to 1,498.66.
Turnover on the Tokyo Stock Exchange's main board was
subdued at 2.09 trillion yen ($19.7 billion) versus the daily
average of 2.34 trillion yen over the past year.
The market was relieved as the Chinese yuan CNY=CFXS was
largely stabilising after heavy falls early this week and as
there was no fresh escalation in Sino-U.S. tensions over the
last 24 hours. Also, data showed Chinese exports rose 3.3% in July from a
year earlier, when analysts had expected a fall of 2%. Imports
also declined by less than expected, suggesting some resilience
to the drawn-out Sino-U.S. tariff struggle. "The market calmed down a bit as there was no particular bad
news," said Soichiro Monji, senior economist at Sumitomo Mitsui
DS Asset Management.
Growth-value shares extended their outperformance since
mid-July, with the Topix Growth index .TOPXG rising 0.1% while
value shares .TOPXV dipped 0.3%.
Growth-value plays such as chip sector stocks Advantest
6857.T and Tokyo Electron 8035.T climbed 3.1% and 1.1%,
respectively, while typical value plays such as banks .IBNKS.T
shed 0.6%.
Yet worries that the confrontation between the world's two
largest economies could tip the global economy into a severe
downturn or even a recession kept many investors on the
sidelines, with energy and resource-related shares lagging.
The oil and coals products sector .IPETE.T dipped 4.5% to
become the worst performer of Tokyo's 33 sub-indexes, while the
mining sector .IMING.T was the second worst, down 2.3%.
"I see this as a temporary relief rally, which will likely
be short-lived," said Masanari Takada, cross-assets strategist
at Nomura Securities.
"Foreign investors' appetite for Japanese equities is not
strong as they are moving away from value stocks."
Trading mostly focused on companies that just published
Index heavyweight SoftBank Group 9984.T fell 2.7%. The
firm raked in a record quarterly net profit for a Japanese firm,
but the total was boosted by gains from sales of a part of its
stake in Alibaba BABA.K .
SoftBank's results have been increasingly volatile as Chief
Executive Masayoshi Son shifts focus from the predictable income
of telecoms in favour of bets on startups with shifting
valuations. Justsystems 4686.T hit limit-high, soaring 19.6% after the
software developer reported strong profit growth in April-June.
Shares of some other technology firms reporting bumper
earnings also jumped, with Lasertec 6920.T surging 14.0% and
Optorun 6235.T 14.6%.
Sumitomo Osaka Cement 5232.T advanced 8.6% after its
earnings beat market expectations. But not all the earnings reports were rosy.
Heavy equipment maker IHI 7013.T tumbled 13.6% after
posting weak quarterly results. Resource conglomerate JXTG
5020.T , hurt by weak oil prices, fell 6.0%. JXTG Holdings 5020.T shed 5.5% to hit its lowest since
November 2016, following the oil and metals company's quarterly
profit plummeting 88% on lower petrochemical margins in
April-June. JGC Corp 1963.T slid 6.5% after the engineering company
reported a 21% drop in its April-June net profit during the
Tokyo exchange's midday break. Looking ahead, about 630 companies, including Japan Post
Holdings 6178.T , SMC Corp 6273.T and Bridgestone 5108.T ,
will announce earnings results on Friday.
($1 = 106.0200 yen)

Nikkei snaps 4 days of losses but mood stays fragile; energy firms weak

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