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Nikkei rebounds from 8-month lows as bargain-hunters prop auto shares

08/23/2021 | 02:37am EDT

TOKYO, Aug 23 (Reuters) - Japan's Nikkei share average jumped on Monday, after plumbing an eight-month low in the previous session, as auto-related stocks rebounded from losses following Toyota Motor's announcement of slashing global production by 40% next month.

The Nikkei rose 1.78% to 27,494.24 on bargain-hunting after it hit its lowest since December on Friday.

"The rally today seems to be driven mostly by short-covering after big plunges," said Masato Kogure, group leader of execution at Tokai Tokyo Securities.

The market shrugged off a defeat of Prime Minister Yoshihide Suga's close ally in a mayoral election in Yokohama, Suga's own constituency.

Suga's falling popularity ahead of a ruling party leadership election expected next month and a general election likely in October has been raising worries about political instability.

But some investors think the market could benefit if a new leader is elected, who could possibly enjoy a honeymoon period and help the ruling party win a general election.

The broader Topix gained 1.83% to 1,915,14, led by a 3.1% surge in the transport equipment index.

The sub-index fell more than 10% last week, one of the steepest drop since early 2020, after Toyota's announcement.

Toyota rebounded 3.4%, while Denso jumped 6.6% and Nissan Motor rose 3.4%, as investors thought that last week's selling was overdone, and impact of Toyota's output cut would be short-lived.

All but one of the TSE's 33 industry sub-indexes were in the black, with highly volatile shippers shares up 5.0%.

Electric machinery shares also gained 2.7%, with Keyence, Sony < 6758.T>, and Hitachi rising 4.7%, 3.6% and 2.7%, respectively.

Casino-related shares rose, with Sega Sammy up 5.3% and Konami gaining 4.4%, even after an anti-casino candidate supported by opposition parties won the Yokohama mayoral race.

SoftBank Group lost 1.1%, after its plan to sell British chip designer ARM to Nvidia Corp hit a major hurdle, as a UK regulator found it could damage competition and weaken rivals, and required a further lengthy investigation. (Reporting by Hideyuki Sano; Editing by Subhranshu Sahu and Rashmi Aich)

© Reuters 2021
Stocks mentioned in the article
ChangeLast1st jan.
DENSO CORPORATION -0.18% 7793 End-of-day quote.27.05%
HITACHI, LTD. -0.10% 6685 End-of-day quote.64.45%
KEYENCE CORPORATION -0.06% 67210 End-of-day quote.15.88%
KONAMI HOLDINGS CORPORATION 2.19% 6540 End-of-day quote.12.76%
NISSAN MOTOR CO., LTD. -1.39% 587.2 End-of-day quote.4.86%
NVIDIA CORPORATION 0.15% 227.26 Delayed Quote.74.08%
SEGA SAMMY HOLDINGS INC. 1.71% 1666 End-of-day quote.2.40%
SOFTBANK GROUP CORP. 0.55% 6610 End-of-day quote.-17.97%
TOYOTA MOTOR CORPORATION 0.00% 1983.5 End-of-day quote.24.64%
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