Japanese shares fall on profit-taking, pandemic worries

TOKYO: Japanese shares fell on Thursday as investors trimmed their positions after a recent rally, with a possible extension of COVID-19 emergency measures fuelling concerns about domestic economic growth.

The Nikkei share average trimmed the day's losses to close 0.33% lower at 28,549.01, but still snapped a five-day, 2.1% winning run. The broader Topix fell 0.5% to 1,911.02.

"We can say the market is down due to profit-taking, but there are also uncertainties ahead of us that are making investors cautious," said Takatoshi Itoshima, strategist at Pictet Asset Management.

"Overseas investors particularly are sceptical about the pace of Japan's COVID-19 vaccine rollouts, while the economic outlook remains unclear as Japan is leaning toward extending the state of emergency."

Japan, which is slated to host the delayed Tokyo 2020 Olympics in July, is struggling to contain a fourth wave of infections.

Tokyo governor Yuriko Koike on Wednesday sought to extend the current state of emergency, originally set to be lifted at the end of May, for "about another month," while Osaka in the western region has made a similar request.

Steel makers and shippers led Thursday's declines, falling 2.6% and 2.3%, respectively, while air transport gained the most on the exchange, rising 2.3%.

Astellas Pharma, up 3.4%, was the biggest percentage gainer among the top 30 core Topix names. Murata Manufacturing Co led laggards with a 3% slide.

Meanwhile, daily turnover swelled to 5.6 trillion yen, the highest in more than three years, due to rebalancing flows related to MSCI's regular reshuffle, with 29 names dropping from the main index.

Nikko Asset Management strategist John Vail said he was staying positive, predicting a strong rebound in Japan's economy into year-end that will buoy corporate profits and bolster investor sentiment. "Japan's situation seems near the nadir," he said.