Japan’s Nikkei holds ground despite surprise economic contraction
TOKYO — Japan’s Nikkei index edged higher on Tuesday, as traders scooped up beaten-down stocks, even as data showed a surprise contraction in the domestic economy.
The Nikkei share average rose 0.11% to 27,994.68 by the midday break, while the broader Topix gained 0.33% to 1,963.44.
“Appetite for Japanese stocks is getting stronger as investors see them as a bargain,” said Chihiro Ohta, assistant general manager at the investment research and investor services at 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 8.24% to become the biggest loser on the Nikkei after the staffing agency reported first-half earnings that disappointed investors. Advertising giant Dentsu Group lost 6.5%.
Of the Nikkei components, 151 stocks advanced, against 70 that fell.
The banking sector rose 2.32% and was the top gainer among the Tokyo Stock Exchange’s 33 industry sub-indexes.
Sumitomo Mitsui Financial Group jumped 4.4% and Mizuho Financial Group rose 1.38% after the banks reported strong second-quarter profits on demand from overseas clients looking to lock in loans ahead of higher interest rates.
Shionogi climbed 2.64% after a report said the Japanese government would re-evaluate its COVID-19 drug later this month for emergency approval.
Technology investor SoftBank Group rose 2.18% after posting its biggest daily loss in more than two-and-a-half years in the previous session.
“Given that both growth and value shares were gaining, market fundamentals are firm,” said Yugo Tsuboi, a senior strategist at Daiwa Securities. (Reporting by Junko Fujita; Editing by Subhranshu Sahu)
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