Nikkei rises 2% on hopes Olympics will be held later

  • Reuters
  • Stock Market News
Nikkei rises 2% on hopes Olympics will be held later
Credit: © Reuters.

SYDNEY, March 23 (Reuters) - Japan's share benchmark Nikkei rebounded strongly on Monday, on optimism the Tokyo Olympics will not be cancelled after the International Olympic Committee (IOC) flagged the possibility of a postponement of the Games for the first time.

The prospect of a postponement rather than cancellation of the Toyko Games due to start in July helped Japanese shares buck the global trend. Markets in the region plummeted on Monday on recession fears as more countries around the world adopted draconian measures to contain the spreading coronavirus.

Hopes of the Bank of Japan buying Exchanged Traded Funds (ETFs) more aggressively and public pension funds rebalancing their stock portfolio following recent sell-offs also lent support to the market.

The Nikkei average .N225 gained 2.0% to 16,887.78, off a 3-1/2-year low of 16,378.94 touched last Tuesday.

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. MKTS/GLOB

The Nikkei's volatility index .JNIV , a measure of investors' volatility expectations based on option pricing and considered to be a fear gauge, dropped 6.0% to 54.97, 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. 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. firm Dentsu Group Inc 4324.T jumped 8.6% 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. SoftBank Group 9984.T soared 18.6% to hit its daily limit and became the most-traded stock on the bourse as the tech conglomerate said it would sell up to 4.5 trillion yen ($41 billion) in assets to fund a share buyback of up to 2 trillion yen and reduce debt. broader Topix .TOPX advanced 0.7% to 1,292.01, with four-fifths of the 33 sector sub-indexes on the Tokyo Stock Exchange ending in positive territory.

In contrast to the market's firm tone, air transport .IAIRL.T lost 5.6% to become the worst performing sector, with ANA Holdings Inc 9202.T diving 8.6%, on the back of evaporating demand amid the global coronavirus outbreak.

Another notable mover was the TSE REIT index .TREIT , which slumped 16.8% in the previous session to hit a seven-year trough, bounced back by a remarkable 13.8%.

($1 = 109.9100 yen)

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