Japanese stocks follow Wall Street gains, fears about China limit the rally

Japanese shares closed higher on Tuesday, tracking Wall Street gains Monday night, but concerns about the impact of China’s anti-Covid-19 lockdowns on local companies curbed their rally.

The Nikkei index rose 0.41 percent to close at 26,700.11 points. The broader Topix index rose 0.11 percent to 1,878.51 points, after falling briefly earlier in the session.

“Investors are being cautious about the impact of the potential economic slowdown in China on Japanese companies, as the Beijing shutdown is now likely,” said Tomichiro Kubota, chief market analyst at Matsui Securities.

“The market rose today thanks to the gains on Wall Street and the decline in US Treasury yields,” he added.

HSBC Holdings Inc on Tuesday reported a 27 percent drop in quarterly profit, as the Asia-focused bank weighed on lower revenue and slower growth in Hong Kong.

Europe’s largest bank with a market capitalization of $130 billion posted a pre-tax profit of $4.2 billion for the first quarter of the year ending in March, compared to $5.78 billion in the same period a year earlier.

The results were better than the average estimate of 16 analysts compiled by HSBC, which amounted to 3.72 billion dollars.

About two-thirds of the pre-tax profits recorded by the London-based bank come from Asia.

The share of SoftBank Group provided the biggest boost to the Nikkei index, which rose 4.13 percent, followed by the share of the M3 medical services platform, which jumped 5.04 percent. Advantest, the maker of chip testing equipment, rose 2.28 percent.

Sumitomo Mining fell 6.83 percent, the biggest loser on the Nikkei index, after the mining and smelting company said it would halt a long-term feasibility study on a nickel processing plant project in Pomala, Indonesia.