Tokyo shares turn lower after Wall Street falls

TOKYO: Tokyo's benchmark Nikkei index moved lower in early trade on Wednesday after Wall Street shares slipped and with Japan struggling to control a surge in virus cases.

The Nikkei 225 index gave up gains and slipped 0.08 percent, or 22.24 points, to 27,402.23 while the broader Topix index also edged down 0.03 percent, or 0.49 points, to 1,915.14.

The dollar stood at 109.56 yen, nearly flat from 109.59 yen in New York Tuesday.

The falls came as Wall Street shares ended lower after a five-day winning streak following a lacklustre US retail sales report that exacerbated worries about the latest Covid-19 wave.

Tokyo stocks open higher on US gains

"It's hard to expect sharp falls (in Tokyo) now since the market has already been soft since the start of the week," Okasan Online Securities said in a note.

"But active buying is also unlikely as the spread of the Delta variant shows no signs of slowing down," Okasan said.

The market is seeing some bargain hunting, but not enough to lift the overall market for now, it added.

"In addition to the overnight falls of US and European shares, the Japanese government extended the current state of emergency" for Tokyo and other areas as the nation struggles to control a surging infection wave, the brokerage said.

"Investors continue to believe that economic normalisation will be delayed because of the spread of the coronavirus," Okasan said.

Shortly before the market opened, the finance ministry reported that Japan's exports surged 37 percent in July compared with the same month a year ago, thanks to a recovery in automobile and steel exports.

It marked five straight months of increase, while imports also rose 28.5 percent for the same month from a year ago.

Japan's core machinery orders fell 1.5 percent in June from the previous month.

The negative reading however was better than an expected fall of 2.9 percent, the median forecast among private economists surveyed by the Nikkei QUICK.

Among major shares, Toyota dropped 0.12 percent to 9,741 yen.

Sony Group added 0.23 percent to 10,745 yen.

Advantest, producer of chip testing tools, gave up earlier gains and fell 0.33 percent to 9,040 yen.

Construction equipment maker Komatsu slipped 0.58 percent to 2,724.5 yen.