March 4, 2020 / 7:06 AM / a month ago

Japanese shares almost flat, Biden results lend some support

* Rise in U.S. stock futures on Biden resurgence supports

* Investors cautious after Fed’s big rate cut fail to lift mood

* Banks, insurers hit the most; carmakers hurt by yen’s gains

By Hideyuki Sano

TOKYO, March 4 (Reuters) - Japanese shares ended almost flat on Wednesday as a pickup in Wall Street futures following early results of U.S. Democratic primaries helped stocks claw back earlier losses after the Federal Reserve’s emergency rate cut failed to lift confidence.

After a volatile session, the Nikkei share average ended 0.08% at 21,100.06 while the broader Topix dipped 0.17% to 1,502.50, briefly touching a six-month low. Both indexes stood not far from six-month lows.

The market got a mild boost from 1%-plus gains in S&P500 futures as a resurgent former U.S. Vice President Joe Biden in the Democrats’ “Super Tuesday” primaries over chief rival Senator Bernie Sanders, who is seen as being tougher on big business.

More than one-third of the delegates who pick the eventual nominee at a July convention are up for grabs in primary elections in 14 states on Tuesday, which could provide some clarity in a muddled race for the White House.

Still, the market mood was grim as the spread of coronavirus both in Japan and globally looks set to hit companies’ bottom lines well beyond the current quarter.

The Fed slashed rates by a half percentage point in its first rate cut outside of a regularly scheduled policymaker meeting since 2008 financial crisis but the moved failed to boost Wall Street shares.

“A Fed rate cut had been already priced in. And in a sense the hasty move gave you the impression that the Fed’s ammunition is quickly dwindling,” said Hiroyuki Ueno, senior strategist at Sumitomo Mitsui Trust Asset Management.

“And the fundamental problem is we are dealing with a virus, which does not care about interest rates,” he said.

Banks were the biggest losers as falls in U.S. bond yields to record low look set to shrink their income further at a time negative domestic interest rates are hurting their profits.

Bank index fell 2.2%, with MUFG falling 2.3%, SMFG losing 2.1% and Mizuho shedding 1.9%.

Insurers, who also increasingly rely on foreign bonds for income, also suffered. The insurer index fell 1.2%.

Meanwhile, many exporters were bruised by a rise in the yen, which hit a five month high of 106.85 per dollar on Wednesday following the Fed’s rate cut.

Shin-Etsu Chemical fell 2.2% while Toyota Motor dropped 1.0%. Subaru and Suzuki Motor both lost 2.4%.

Telecom companies did better as the coronavirus shifted many businesses to remote work situations, boosting demand for communications systems. KDDI rose 5.6% while NTT Docomo gained 2.8%. (Editing by Sam Holmes)

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