Japanese shares edged lower on Tuesday after data showed that domestic household spending had dropped at the fastest pace on record in May during the coronavirus-led lockdown, pushing the world’s third-largest economy deeper into decline.

Despite positive cues from Wall Street, the benchmark Nikkei average was down 0.56% at 22,587.73 by the midday break, a day after the index marked its highest close since June 10.

US stocks saw sharp overnight gains, with Nasdaq hitting an all-time high on strong services industry activity in June along with investor optimism about a revival in China’s economy.

Data showed that US services industry activity rebounded sharply in June, almost returning to its pre-COVID-19 pandemic levels, but a resurgence in coronavirus cases that has forced some restaurants and bars to close again threatens the emerging recovery.

Closer home, Japan’s household spending had slumped 16.2% in May at the quickest pace on record, with the coronavirus outbreak leading to large cuts in spending on hotels, transportation and eating out.
The broader Topix inched down 0.48% at 1,569.54 by the recess.

All but seven of the 33 sector sub-indexes on the Tokyo Stock Exchange were in negative territory, steel makers , drugmakers and banks leading the losses.

Department store operator Takashimaya Co Ltd slipped 2.64% after the company reported a net loss of 20.53 billion yen in the March-May quarter, with sales nearly halving from the previous year.

Bucking the overall weakness, Nikkei heavyweight SoftBank Group Corp climbed 3.26% after the company’s massive buybacks, reaching levels unseen since during the dot-com bubble in early 2000.

Reuters