July 6, 2020 / 7:32 AM / a month ago

Nikkei hits near 1-month high as China rebound hopes boost shippers, steelmakers

TOKYO, July 6 (Reuters) - Japanese shares rose on Monday as signs of an economic rebound in China boosted shippers and steelmakers, while worries over a spike in COVID-19 cases in some U.S. states were offset by prospects of more policy support to sustain the recovery.

Japan’s Nikkei share average rose 1.83% to 22,714.44, its highest close since June 10. The broader Topix gained 1.60% to 1,577.15.

Cyclical stocks led the gains as Chinese shares jumped more than 5% to a five-year high on hopes of a recovery in the world’s second-largest economy.

Shares of securities brokerages jumped 3.3%, while shippers and steelmakers, both strongly leveraged to demand in China, gained 3.3% and 2.7% respectively.

Nissan Motor gained 5.2% after the carmaker said its sales in China, the world’s biggest auto market, rose last month.

Including those, value-oriented shares outperformed by rising 1.9%, compared to a 1.3% gain in growth shares .

Retailers also climbed, with department store operator J.Front Retailing advancing 7.3% and Seven & i Holdings adding 2.9%.

SoftBank Group rose 2.4% to a 14-month high, helped by hopes of share buybacks and unwinding of positions by short-sellers.

Still, trade volume was lacklustre overall, pointing to a lack of strong conviction among investors on the strength of the economy hobbled by the COVID-19 pandemic.

The turnover on the Tokyo Stock Exchange’s main board was only 1.801 trillion yen, not far from the lowest level for this year and about 20% below the average.

A spike in virus cases in some U.S. states is seen as a threat to the global economic recovery, even though investors are sticking to hopes that a gradual recovery could continue with steady policy support.

“The market is looking to see if selective lockdowns implemented by some states will curtail infections within a week or two,” said Nobuhiko Kuramochi, market economist at Mizuho Securities. (Reporting by Hideyuki Sano; Editing by Sherry Jacob-Phillips and Subhranshu Sahu)

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