April 22, 2020 / 6:49 AM / 3 months ago

Japan shares touch 2-week low on oil slump, caution before earnings

TOKYO, April 22 (Reuters) - Japanese shares fell to two-week lows on Wednesday, as investors unwound bets in riskier assets following the historic collapse in crude oil prices, while caution ahead of corporate results later this week also weighed on sentiment.

The Nikkei index ended down 0.74% at 19,137.95, with consumer discretionary and information technology sectors leading declines.

Oil prices slumped again, with Brent falling to the lowest since 1999, as the market struggled with a massive crude glut amid a collapse in demand caused by the coronavirus outbreak. [nL1N2C70AV ]

The extent of the price disruption has pushed other financial markets lower, prompting investors to reverse long position in equities.

Denting sentiment further, investors were reluctant to hold big positions in Japanese shares before corporate results announcements later this week, which are likely to reveal the extent of economic damage caused by the coronavirus pandemic.

“The markets have largely priced in bad earnings for the first quarter, but companies cannot reasonably forecast revenue for the second quarter and beyond,” said Yutaka Masushima, market analyst at Monex Securities in Tokyo.

“Revenue for some companies in retail and restaurants have fallen to zero. Other sectors like healthcare and IT can still do well, but overall there are a lot of risks.”

On the Nikkei index, there were 55 advancers against 165 decliners.

The biggest percentage losers in the index were electronic components maker Alps Alpine Co Ltd, down 5.59%, followed by oil refiner Idemitsu Kosan Co Ltd, losing 5.29%, and industrial equipment maker IHI Corp, down by 5.24%.

The largest percentage gainers in the index were Shinsei Bank Ltd, up 3.59%, followed by semiconductor testing equipment makers Advantest Corp, gaining 3.55%, and Screen Holdings Co Ltd, up by 3.38%.

Games maker Nintendo rose 2.06% after activist investor ValueAct Capital Partners LP said it had built a stake of over $1.1 billion in the company in a bet that the development of new entertainment products will fuel growth.

Meanwhile, the broader TOPIX index fell 0.63% to 1,406.90.

The volume of shares traded on the Tokyo Stock Exchange’s main board was 1.25 billion, compared to the average of 1.96 billion in the past 30 days. (Reporting by Stanley White; editing by Uttaresh.V and Subhranshu Sahu)

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