Tokyo stocks rebound in early trade

TOKYO: Tokyo stocks reversed earlier losses and entered positive territory in Monday morning trade, as investors awaited corporate earnings and Japan's upcoming general election.

Inflation worries continued to weigh on the market, prompting some central banks to prepare for rate hikes.

But many analysts remained bullish on Tokyo shares, with a weaker yen providing support.

The benchmark Nikkei 225 index added 0.26 percent, or 75.01 points, to 29,143.64, recovering from an early morning low of 28,950.39. But the broader Topix index inched down 0.17 percent, or 3.49 points, to 2,020.44.

The dollar stood at 114.29 yen, nearly flat from 114.28 yen in New York Friday.

Global inflation worries fuelled by soaring energy prices prompted Bank of England governor Andrew Bailey to announce Sunday that he might have to "act" in the face of inflation risks.

Expectations are rising that the US Fed may follow suit possibly in the first half of next year, according to Tapas Strickland of National Australia Bank.

"How risk markets respond to the bringing forward of rate hike expectations will be key to watch this week, as will anecdotes from the profit-reporting season to see how firms are dealing with higher input costs and to what extent they are able to pass this onto consumers," he said.

But analysts predicted that the yen's fall should encourage investors as governments around the world attempt to reopen their economies.

Gains on Friday of US and other global markets should also encourage investors, analysts said, while expectations are high that the Japanese government will issue fresh pandemic stimulus after the October 31 general election.

Tokyo shares remain well supported and could climb higher this week, Okasan Online Securities said.

"As the corporate earnings season kicks into full gear from the month's end, investors seem to have high hopes that the depreciation of the yen may prompt businesses to upgrade their earnings," the brokerage said.

Among major shares, Toyota surged 2.88 percent to 2,051 yen. Energy developer INPEX firmed 3.74 percent to 999 yen. Construction equipment maker Komatsu rose 0.55 percent to 2,818.5 yen.

Mitsubishi UFJ Group rose 0.35 percent to 659.4 yen, while Sony Group fell 1.20 percent to 12,735 yen.

SoftBank Group trimmed early gains and was hovering up 0.05 percent to 6,293 yen.