Nikkei slips on virus restrictions, caution before U.S. Senate runoffs

TOKYO, Jan 5 (Reuters) – Japanese shares edged down on Tuesday as the local government looks set to declare a state of emergency to deal with rising COVID-19 infections while uncertainty about Senate runoffs in the U.S. state of Georgia also dented investors’ risk appetite.

Nikkei share average dipped 0.10% to 27,232.38 while the broader Topix ticked down 0.05% to 1,793.66, though both indexes reclaimed much of early losses.

“There is little reason to buy hastily today ahead of the runoff in Georgia,” said Yuya Fukue, trader at Rheos Capital Works.

The elections will determine who will control the Senate, and thereby how much U.S. President-elect Joe Biden can push through Democrats’ agenda, including rewriting the tax code, boosting stimulus and infrastructure spending.

Airlines and train operators were among worst performers in the Tokyo Stock Exchange’s 33 industry subindexes, falling 1.2% and 1% respectively, on the prospects of fresh curbs to contain the health crisis.

Local media reported earlier in the day that Japanese Prime Minister Yoshihide Suga told a ruling party meeting a state of emergency declaration for Tokyo and the surrounding area would be decided on Thursday.

Tokyo Disney Resort operator Oriental Land dropped 1.43%.

Carmakers fell 1.1% as the yen’s gains against the U.S. dollar could chip away their profit from exports.

Hino Motors fell 2.9% while Nissan Motor dropped 2.2% and Subaru shed 1.6%.

The yen hit a near-10-month high of 102.715 per dollar on Monday.

On the other hand, many momentum shares, or those that have performed well in recent months, continued to rally.

Tokyo Electron rose 2.4% while Murata Manufacturing gained 2.1% and Sysmex gained 0.6%.

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