Japan shares hampered by trade worries, defensives gain

  • Reuters
  • Stock Market News
Japan shares hampered by trade worries, defensives gain
Credit: © Reuters.

* Nikkei up 0.27%, Topix almost flat

* Investors prefer defensives amid trade war uncertainties

* Rakuten gains on cashless service expansion

By Hideyuki Sano

TOKYO, June 6 (Reuters) - Japan's Nikkei eked out small gains on Thursday but the market was hampered by concerns about the U.S. trade war with Mexico and China, prompting investors to buy domestic-demand oriented shares.

The Nikkei share average .N225 rose 0.27% to 20,832.46 though the index was propped up disproportionately by rises in its top two heavyweights, Softbank Group 9984.T and Fast Retailing 9983.T , which rose 3.4% and 2.8% respectively.

The broader Topix .TOPX , which investors say more accurately reflects the market, was almost flat, up 0.03% at 1,530.59.

"Although expectations of rate cuts by the Federal Reserve have led to rallies in U.S. shares, Japanese shares are benefitting less because U.S. rate cuts would strengthen the yen," said Masahiro Ayukai, senior investment strategist at Mitsubishi UFJ Morgan Stanley (NYSE: MS ) Securities.

The Japanese yen hit a five-month high on Wednesday.

Worries about trade wars U.S. President Donald Trump is waging on many fronts hampered semiconductor shares and other exporters.

Murata Manufacturing 6981.T fell 2.3% while TDK 6762.T dropped 2.5% and Taiyo Yuden 6976.T 2.4%.

Nissan Motor 7201.T fell as much as 3.8% and Mitsubishi Motor up to 4.7% after Fiat Chrysler FCHA.MI said it had abandoned its $35 billion merger offer for Renault RENA.PA , the alliance partner of the two Japanese firms.

Uncertainties over the global trade environment goaded investors to seek refuge in defensive and domestic demand-oriented shares, with the wider adoption of cashless services by the government and companies offering a good theme for investors to latch on to.

Rakuten 4755.T jumped 6.5% after the internet company announced a tie-up with East Japan Railway 9020.T on cashless services.

East Japan Railway rose 1.0% while West Japan Railway 9021.T hit a near four-year high, having risen as much as 2.6% at one point.

Line 3938.T , which also offers rival electronic settlement services, gained 4.1%.

Elsewhere, drugmaker Dai-ichi Sankyo 4568.T extended its recent gains on optimism over its cancer drug, rising 1.6% and hitting a record high.

Drugstore chain operator Cocokara Fine 3098.T rose 7.8%, extending its gains so far this week to 34%, as it has become a target of alliance by two of its bigger rivals, Sugi Holdings 7694.T and Matsumotokiyoshi 3088.T .

Park 24 4666.T jumped 4.5% in heavy trade as the operator of parking spaces extended its recovery since the company's earnings announcement at the end of last month.

(Editing by Jacqueline Wong)

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