Massive short squeeze sends Nikkei to 1-month high; SoftBank Group jumps

SYDNEY: Japan's stock benchmark Nikkei jumped 3 per cent to its highest closing level in more than a month on Tuesday, driven by a gigantic short squeeze, with semiconductor-related companies and retailers leading gains.

The Nikkei average rose 3.1 per cent to close at 19,638.81, a peak unseen since March 10.

The Nikkei's volatility index, a measure of investors' volatility expectations based on option pricing and considered to be a fear gauge, slid 11.9 per cent to a three-week low of 37.48.

"A massive short squeeze appears to have powered the rally especially in the afternoon," said Yasuo Sakuma, chief investment officer at Libra Investments.

"At least some investors are seeing early signs of bottoming out and betting a recovery will happen six months ahead."

In the United States, President Donald Trump said on Monday that his administration was close to completing a plan to re-open the economy, which has been largely shut down to slow the spread of the novel coronavirus.

Shares of semiconductor-making equipment producers were in demand following a 1.4 per cent gain overnight in the US Philadelphia semiconductor index.

Silicon wafer producer Sumco Corp gained 5.5 per cent, test device maker Advantest Corp soared 6.4 per cent and chip-making gear manufacturer Tokyo Electron Ltd rose 4.0 per cent.

The Nikkei's heavyweight SoftBank Group Corp climbed 5.2 per cent, shrugging off an earlier announcement that its Vision Fund will post a 1.8 trillion yen ($16.7 billion) loss in the year ended March.

While that is going to result in the entire group's first annual loss in 15 years, some kind of disastrous performance had already been priced in, analysts said.

The broader Topix gained 2.0 per cent to 1,433.51, with all but two of the 33 sector sub-indexes on the Tokyo exchange finishing in positive territory.

Retail, sea transport and services were the top three performing sectors on the main bourse.

FamilyMart Co Ltd surged 9.3 per cent after the convenience store operator forecast a 37.8 per cent increase in net profit for the current business year ending in February.

Bucking the trend were major construction firms, with builder Shimizu Corp dropping 2.8 per cent after it moved towards suspending activity in all seven prefectures that have been put under an emergency decree.

The rest of Japan's top four construction companies, Obayashi Corp, Taisei Corp and Kajima Corp were down between 1.5 per cent and 2.6 per cent.

Elsewhere, the index of Mothers start-up shares advanced 4.8 per cent to 709.03, its highest closing level since March 6.