Japanese shares edge higher despite surprise economic contraction
TOKYO — Japanese shares inched higher on Tuesday, as investors scooped up beaten-down stocks, even as data showed a surprise contraction in the economy.
The Nikkei share average gained 0.1% to close at 27,990.17, while the broader Topix gained 0.37% to 1,964.22.
“Appetite for Japanese stocks is getting stronger as investors see them as a bargain,” said Chihiro Ohta, assistant general manager, investment research and investor services, SMBC Nikko Securities.
“We can shrug off the (Japan economic) data because that was in the past. Japan’s economy stands in a favorable position compared with that in the United States and Europe.”
The Japanese economy unexpectedly shrank for the first time in a year in the third quarter, as global recession risks, a weak yen and sharply higher import costs took a toll on household consumption and business activity.
Recruit Holdings fell 6.67% to become the biggest loser on the Nikkei after the staffing agency reported first-half earnings that disappointed investors. Advertising giant Dentsu Group lost 5.96%.
Of the Nikkei components, 143 stocks advanced, 80 fell and two were flat.
The banking sector rose 2.31% after Sumitomo Mitsui Financial Group (SMFG) and Mizuho Financial Group reported strong second-quarter profits.
SMFG advanced 4.17% and Mizuho rose 1.3%.
Shionogi climbed 2.03%, after a report said the Japanese government would re-evaluate its COVID-19 drug later this month for emergency approval.
Peer Daiichi Sankyo rose 1.72% after its mRNA-based COVID-19 vaccine had reached its primary endpoint in a trial of the shot as a booster.
Technology investor SoftBank Group rose 1.3% after posting its biggest daily loss in more than two-and-a-half years on Monday.
“Given that both growth and value shares were gaining, market fundamentals are firm,” Daiwa Securities senior strategist Yugo Tsuboi said. (Reporting by Junko Fujita; Editing by Subhranshu Sahu and Rashmi Aich)
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