Finance News

Tokyo stocks end higher on drugmakers' advance ahead of virus emergency expansion

Tokyo stocks closed marginally higher Tuesday, as advances made by pharmaceutical issues linked to COVID-19 treatments were somewhat offset by pandemic concerns as the state of emergency here is expected to be expanded to include three western prefectures.

The 225-issue Nikkei Stock Average edged up 25.31 points, or 0.09 percent, from Friday to close the day at 28,164.34, marking its fresh highest closing level since Aug. 8, 1990.

The broader Topix index of all First Section issues on the Tokyo Stock Exchange, meanwhile, added 3.00 points, or 0.16 percent, higher at 1,857.94.

The pharmaceutical sector got a boost following reports that an arthritis medication developed by the Japanese drugmaker Chugai Pharmaceutical had been given the all-clear by the British government to be used to treat patients suffering from severe COVID-19 symptoms.

The British government said in a statement that the use of the arthritis medications tocilizumab and sarilumab to treat severe COVID-19 cases had been recommended based on findings that suggest the drugs could reduce the risk of death by 24 percent.

"Chugai Pharmaceutical was the biggest contributor to today's Nikkei rise," Maki Sawada, a strategist at Nomura Securities' Investment Content Department, was quoted as saying.

Other market analysts pointed to investors buying back stocks as their prices began to fall, showing that appetite was still strong.

"Investors bought back stocks as soon as the market started falling, showing the fundamental strength of demand," Masahiro Ichikawa, chief market strategist at Sumitomo Mitsui DS Asset Management, was quoted as saying.

"They also got confidence in the market as U.S. futures rose overnight," Ichikawa added.

Reports of the government's plan to expand the current state of emergency over the virus to cover Osaka, Kyoto and Hyogo prefectures, took a toll on some restaurant and retail issues, but strategists said the impact on the overall economy would be slim.

This is because, they said, the virus declaration, already in place for the Greater Tokyo Area, is primarily focused on restaurants and bars closing early and not on restricting people's movements, although calls have been made for people to work remotely and refrain from unnecessary trips outdoors, especially after 8:00 p.m. local time.

Sawada was quoted as saying that the impact proved modest as economic recovery hopes in the stock market have not receded.

"With the restriction measures focusing on eating out, risks such as factory closures or suspensions were lower and the impact on the overall economy is expected to be limited," Sawada said.

By the close of play, electric power and gas, oil and coal product and air transportation-oriented issues comprised those that gained the most.

Chugai Pharmaceutical climbed 5.9 percent, while Takeda Pharmaceutical added 3.2 percent. Takeda, which will sell and distribute Moderna Inc.'s vaccine in Japan, will reportedly begin the vaccine's clinical trial in Japan as early as next week.

Chip-related issues found favor after major automakers including Toyota said they will lower production due to a shortage of semiconductor supplies.

As a result, Tokyo Electron gained 0.3 percent, while Shin-Etsu Chemical gained 3.3 percent.

Renesas Electronics, meanwhile, leapt 5.2 percent, while Fuji Electric closed the day 4.9 percent higher.

But automakers closed down owing to production cuts, with Toyota Motor dropping 0.6 percent, while Honda reversed 1.5 percent by the close.

Nikkei heavyweight SoftBank Group was a notable winner, however, advancing 1.4 percent, after one of its funds sold part of its stake in Uber Technologies for 2 billion U.S. dollars.

Issues that rose outpaced those that fell by 1,076 to 1,038 on the First Section, while 72 ended the day unchanged.

On the main section on Tuesday, 1,335.47 million shares changed hands, dropping from Friday's volume of 1,389.16 million shares.

The turnover on the first trading day of the week came to 2,894.73 billion yen (27.78 billion U.S. dollars).

Markets here were closed on Monday for a national holiday. 

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