Nikkei drops as oil woes add to pandemic fears ahead of earnings

  • Reuters
  • Stock Market News
Nikkei drops as oil woes add to pandemic fears ahead of earnings
Credit: © Reuters.

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. 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. 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. 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)

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