Japan's Nikkei share average bounced back from a three-week low hit early on Wednesday as demand in cyclical stocks offset fears from tensions following North Korea's ballistic missile launch. Automakers, tech shares and banking stocks were among Wednesday's winners as the dollar was back above the 113.00 yen level in the afternoon.
Japan’s Nikkei share average bounced back from a three-week low hit early on Wednesday as demand in cyclical stocks offset fears from tensions following North Korea’s ballistic missile launch. Automakers, tech shares and banking stocks were among Wednesday’s winners as the dollar was back above the 113.00 yen level in the afternoon, lifting overall sentiment. Toyota Motor Corp rose 1.6 percent, Nissan Motor Co gained 1.7 percent and Hitachi Ltd advanced 1.3 percent. Mizuho Financial Group rose 1.3 percent and Sumitomo Mitsui Financial Group added 1.2 percent.
“Investors were picking up cyclical stocks, particularly automakers as they have laggard behind the rises of the overall market,” said Yoshihiro Okumura, general manager at Chibagin Asset Management. The Nikkei share average ended 0.3 percent higher to 20,081.63 after plumbing to 19,888.90 in the morning, its lowest since June 16.
But gains were limited, with U.S. market closed for the Independence Day holiday on July 4 while investors remaining cautious over geopolitical tension in the Korean Peninsula. “U.S. Secretary of State (Rex) Tillerson mentioning North Korea’s intercontinental ballistic missile (ICBM) early this morning has caused the market to remain cautious,” said Masahiro Ichikawa, senior strategist t Sumitomo Mitsui Asset Management.
“At the same time, the domestic market is retaining a fair degree of calm regarding the situation, while waiting to see how the United States responds to North Korea’s actions.” Tillerson called for global action after North Korea tested a newly developed ICBM, calling it a new escalation of Pyongyang’s nuclear threat.
However, on Wednesday, investors wasted no time in taking profits from defence industry-related firms, which surged the previous day in response to Pyongyang’s ICBM launch. Ishikawa Seisakusho Ltd, a maker of defence equipment including landmines, fell 3.9 percent after rallying roughly 20 percent the previous day. Defence system equipment maker Nippon Avionics Co shed 2.5 percent following the previous day’s rise of 5.6 percent. The broader Topix rose 0.6 percent to 1,618.63.