Tokyo stocks close lower as spike in COVID-19 variants dent sentiment

TOKYO, June 29 (Xinhua) -- Tokyo stocks closed lower Tuesday as investor sentiment was dented by a surge in highly transmissible variants of COVID-19 clouding the outlook for the global economic recovery, although gains in tech issues helped cap losses.

The 225-issue Nikkei Stock Average dropped 235.41 points, or 0.81 percent, from Monday to close the day at 28,812.61.

The broader Topix index of all First Section issues on the Tokyo Stock Exchange, meanwhile, lost 16.19 points, or 0.82 percent, to finish at 1,949.48.

Local dealers said that concerns over a resurgence of COVID-19 cases domestically and in foreign countries sparked fears over the impact on the global economy as the further spread of highly contagious variants could lead to further lockdowns and hamper peoples' movement and supply chains.

Some analysts specifically noted the downside effects the COVID-19 resurgence could have on Japan's economy, particularly in light of the fact Tokyo is hosting the Olympics in less than one month, with athletes from overseas already testing positive for the virus.

"And, there are concerns around the spread of the COVID-19 variant. Prospects of Japan's economic outlook are specially bleak because the country is hosting the Olympics and its impact on the pandemic is unknown," Soichiro Matsumoto, chief investment officer for Japan at Credit Suisse Private Banking, was quoted as saying.

In recent COVID-19-related news, a spike in cases across Australia has seen stricter antiviral measures put in place for 80 percent of its citizens, while some European countries have imposed new restrictions on unvaccinated people traveling from Britain.

The latest surge in COVID-19 cases, particularly the Delta variant which has hit Australia and Britain hard among other countries, strategists said, is weighing hard on the market at a time when it looked as though stocks' recovery had begun to turn a corner.

"A rebound in COVID-19 cases domestically and globally is hitting the Japanese market hard when its stocks were on a positive track toward further recovery," Kazuo Kamitani, a strategist in the Investment Content Department of Nomura Securities Co., was quoted as saying.

By the close of play, mining, iron and steel, and glass and ceramic product-oriented issues comprised those that declined the most, and issues that fell outpaced those that rose by 1,710 to 402 on the First Section, while 73 ended the day unchanged.

The rise in the Delta variant COVID-19 cases across the globe saw U.S. crude oil futures drop which weighed on energy stocks.

Among these, oil exploration giant Inpex fell 4.7 percent, while Idemitsu Kosan lost 1.6 percent. Cosmo Energy Holdings, meanwhile, ended the day 1.7 percent lower.

IHI retreated 3.0 percent, while Mitsubishi Heavy Industries dropped 3.7 percent, as suppliers for Boeing Co. came under pressure following reports the U.S. Federal Aviation Administration said it would not certify Boeing's 777X aircraft possibly until late 2023, delaying its planned launch, due to safety concerns.

Among issues sensitive to domestic demand losing ground on Japan's COVID-19 situation, department store chain operator Takashimaya fell 4.7 percent, while Isetan Mitsukoshi ended 3.2 percent lower, on concerns rising virus cases could lead to another round of enhanced antivirus measures which could negatively impact patronage.

On the main section on Tuesday, 838.05 million shares changed hands, dropping from Monday's volume of 870.73 million shares.

The turnover on the second trading day of the week came to 2,339.88 billion yen (21.14 billion U.S. dollars).