Tokyo stocks rise to 1 week high on hopes of coronavirus slowdown, Wall St rally

• The benchmark Nikkei average gained 2.0pc to 18,950.18, its highest closing since March 31, tracking sharp gains in Wall Street stocks overnight.
• The broader Topix rose 2.0pc to 1,403.21, also a highest closing level in a week, with all of the 33 sector sub-indexes on the exchange finishing in positive territory.
• Fujifilm Holdings Corp, which produces of Avigan anti-flu drug, a potential COVID-19 treatment, retreated 5.5pc after hitting a record high on Monday.

SYDNEY: Tokyo shares advanced on Tuesday, supported by tentative signs of the coronavirus outbreak being contained in New York and other global hot spots, with long-only investors still awaiting details of Japan's massive economic stimulus package.

The benchmark Nikkei average gained 2.0pc to 18,950.18, its highest closing since March 31, tracking sharp gains in Wall Street stocks overnight.

US stocks rallied on Monday, with the S&P 500, Dow Jones Industrial Average, and Nasdaq Composite all rallying more than 7pc, encouraged by the slowing death toll from the virus in global hot spots, including New York and Italy.

The broader Topix rose 2.0pc to 1,403.21, also a highest closing level in a week, with all of the 33 sector sub-indexes on the exchange finishing in positive territory.

Stocks that were battered more in recent weeks fared better on Tuesday.

Tokyo Electron Ltd climbed 5.7pc and Advantest Corp soared 12.7pc after US Philadelphia semiconductor index jumped 10.4pc overnight. Samsung Electronics Co Ltd's better-than-expected profit also provided a tailwind.

However, traders said it is just a short-covering rally and lacks conviction, with many long-term investors still waiting for the details of Japan's $1-trillion economic stimulus package.

Indeed, overall activity was subdued, with the volume of shares traded on the main board valued at 2.82 trillion yen, well below its average over the last 20 days of 3.51 trillion yen.

On the flip side, shares that gained recently were pressured by profit taking.

Fujifilm Holdings Corp, which produces of Avigan anti-flu drug, a potential COVID-19 treatment, retreated 5.5pc after hitting a record high on Monday.

Drugstore chain operator Welcia Holdings Co Ltd and web/TV conferencing services provider V-cube Inc shed 5.2pc and 7.2pc, respectively.

The Japanese government is planning to finalise a massive stimulus package worth 108 trillion yen - equal to 20pc of Japan's economic output - to cushion the heavy impact of the pandemic on the world's third-largest economy.

"The proposed large stimulus package is a very positive step. But markets have already begun to price in the passage of a 60 trillion yen stimulus, including a fiscal outlay of 20 trillion yen," said Naoya Oshikubo, senior economist at SuMi TRUST.

"So unless the measures announced are even larger than forecast, market sentiment will not improve in the short-term -- the yen will not weaken and the stock market will not rally."

Prime Minister Shinzo Abe will hold a news conference at 7 p.m. (1000 GMT).

Abe is also set to announce a state of emergency on Tuesday for the capital, Tokyo, and six other prefectures to stem a worrying rise in coronavirus infections in major population centres.

Elsewhere, Nitori Holdings Co Ltd climbed 6.9pc after the discount furniture store operator forecast operating profit to grow 4.4pc in the current business year through February, even after taking into account the potential impact of the coronavirus outbreak.

Takeda Pharmaceutical Co Ltd added 3.9pc on the news that blood products giant CSL Behring has joined forces with the Japanese drugmaker to develop a COVID-19 plasma treatment.