Japanese shares rebound; financials tumble

Japan’s Nikkei share average rebounded on Monday after investors covered their short positions on chip-related stocks, offsetting a drop in financials which were hurt by lower US yields.

The Nikkei share average rose 0.6 per cent to 21,799.11 in midmorning trade, after opening a tad lower. Last week, the benchmark index slipped 2.6 per cent, hit by a drop in oil prices and tech shares.

But analysts said that Nvidia Corp’s dismal earnings, which triggered the tech sell-off, were now priced into the Japanese market and investors are scooping up the chip shares on the dips.

Tokyo Electron rose 2.9 per cent, Advantest Corp added 2.4 per cent and Screen Holdings surged 4.1 per cent, reports Reuters.

Also supporting sentiment was data showing Japan’s exports rose 8.2 per cent in October, reversing the previous month’s decline, analysts said. It was slightly lower than a 9.0 per cent increase expected by economists in a Reuters poll.

Elsewhere, knitting machine maker Shima Seiki Mfg. jumped 12 per cent after the company said it would buy back up to 1 million of its own shares for up to 4 billion yen.

On the downside, banking and insurance tumbled 2.6 per cent and 2.1 per cent, respectively, after US yields fell after a top US Federal Reserve official on Friday said US interest rates are not far off the central bank’s estimates of a neutral level, suggesting that the current tightening cycle may soon end.

Sumitomo Mitsui Financial Group tumbled 3.6 per cent to hit a 14-month low of 4,120 yen, Mitsubishi UFJ Financial Group shed 3.2 per cent, Dai-ichi Holdings declined 2.8 per cent.

Sentiment in financial companies, which hunt for high-yielding products, was also soured by domestic bonds yields after the 10-year JGB yield dropped to 0.095 per cent, the lowest since late August.

The broader Topix advanced 0.2 per cent to 1,632.03.