Sydney, March 23 (Reuters) - Japan’s share benchmark Nikkei edged up on Monday on optimism the Tokyo Olympic Games will not be cancelled after the International Olympic Committee (IOC) said it was stepping up “scenario planning”, including possibly postponing the event.
The relief over the Olymics helped Japanese shares buck the global trend. Markets in the region plummeted on recession fears on Monday as more countries around the world adopted draconian measures over the weekend to contain the spreading coronavirus.
Hopes of the Bank of Japan buying Exchanged Traded Funds (ETFs) more aggressively also continued to lend support to the market.
The Nikkei average gained 0.5% to 16,633.46 by the midday break, not far though from a 3-1/2-year low of 16,378.94 touched last Tuesday. Earlier in the session, the index rose as much as 1.7%.
But overall sentiment remained fragile as U.S. stock futures and Asian shares sank as a rising tide of national lockdowns threatened to overwhelm policymakers’ frantic efforts to cushion what is likely to be a deep global recession.
The Nikkei’s volatility index, a measure of investors’ volatility expectations based on option pricing and considered to be a fear gauge, dropped 2.8% to 56.79, but was not too far from a nine-year peak of 60.86 hit last week.
The IOC said on Sunday that it would hold discussions, including an option of putting back the July 24 start date or even moving the Tokyo Games by a year or more, but said cancelling the event would not solve problems or help anybody.
Japanese Prime Minister Shinzo Abe said for the first time on Monday that the Games may need to be postponed if the event cannot be held in its “complete form” due to the pandemic.
Ad firm Dentsu Group Inc advanced 3.9% on relief after the IOC suggested it was looking to delay but not cancel the Games. Shares of Dentsu, which is Japan’s main marketing agency for the event, had lost almost half of their value year-to-date on worries that the event could be cancelled.
The broader Topix fell 1.0% to 1,270.39 by the midday recess, with more than two-thirds of the 33 sector sub-indexes on the Tokyo Stock Exchange in negative territory. Air transport lost 5.2% to become the worst performing sector, with ANA Holdings Inc diving 7.5%, on the back of evaporating demand amid the global coronavirus outbreak. (Reporting by Tomo Uetake; Editing by Jacqueline Wong)