Japan shares fall on caution ahead of earnings, rising COVID-19 cases before Olympics

TOKYO: Japanese stocks ended lower on Thursday, as caution ahead of corporate earnings season and a surge in COVID-19 cases a week before the Tokyo Olympics begins weighed on sentiment.

The Nikkei share average dropped 1.2% to close at 28,279.09, with the broader Topix also sliding about the same margin to 1,939.61.

Tokyo reported 1,149 new infections on Wednesday, the most since mid-January, despite a new state of emergency that began on Monday and runs through Aug. 22. Many worry that the influx of foreign athletes and Olympic officials could trigger a further surge in cases.

"Infections are still going up, and the Olympics is just about to start, which is making investors cautious," said Masahiro Ichikawa, chief market strategist at Sumitomo Mitsui DS Asset Management.

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"Earnings season is also just about to begin, so there are some position adjustments taking place."

Uniqlo clothing brand owner Fast Retailing Co. ended 1.1% lower. It announced a 72% jump in nine-month operating profit after the close.

Nikon Corp. was the biggest loser on Nikkei tumbling 6.2%, while Hitachi extended losses to a second sesseion, sliding 3.5%.

Steelmakers led gains, with Nippon Steel and JFE Holdings each jumping 1.7%, and Kobe Steel rallying 1.6%.

Iron and steel was the only Topix sector to rise, adding about 1%. Mining lost the most, falling 2.4% amid a slide in crude oil prices.

Carmakers weakened 1.1% on a stronger yen , and after the European Union announced tighter emissions restrictions that will make it impossible to sell gasoline and diesel cars by 2035, including hybrids.

Yamaha Motor fell the most on the Nikkei, losing 2.8%, followed by 2.6% slides for Toyota-owned Hino Motors , fellow truck maker Isuzu Motors, and Mazda Motor.

Among the so-called Big Three, Nissan Motor Co. sank 2.3% and Honda Motor lost 1.8%, while Toyota Motor Corp fared relatively better, slipping 0.4%.