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Japan's Nikkei share average rebounded to a one-week high on Monday morning as investors took heart from US jobs growth, while Eisai extended its gains to its daily-limit high on optimism for its Alzheimer's drug.
Analysts say investors were keeping a watchful eye on the unprecedented rainfall that lashed western Japan over the weekend, killing at least 88 people and shuttering some factories.
The strong US jobs data on Friday helped lift the Nikkei 1.4 per cent to 22,089.47 in midmorning trade, the highest point since July 2. Automakers, including Mazda Motor Corp and Daihatsu Motor Co, had suspended operations at several plants on Saturday, with Mazda shares up 0.3 per cent.
Electronics maker Panasonic Corp said one plant in Okayama, western Japan, could not be reached because of road closures, although it had been closed for the weekend anyway. Panasonic shares dropped 0.7 per cent.
“If the rainfall affects supply chains in the mid-to-long term, there will be selling in impacted stocks. Otherwise the overall impact should be limited,” said Norihiro Fujito, chief investment strategist at Mitsubishi UFJ Morgan Stanley Securities.
For now, an escalating trade war between China and the United States took a back seat as investors cheered strong US payrolls data.
Tech shares and banks gained ground, with TDK Corp rallying 4.7 per cent, Advantest adding 3.6 per cent, Mitsubishi UFJ Financial Group advancing 1.7 per cent and Mizuho Financial Group rising 1.6 per cent.
Eisai Co soared 16 per cent to a daily limit high of 10,710 yen, which is also a record high, extending its surge from Friday. The strong rally came as several brokerages upgraded the stock rating after the Japanese drugmaker and Biogen Inc said that the final analysis of a mid-stage trial of their Alzheimer's drug showed positive results for patients who received the highest dose.
Nomura Securities hiked its rating to 'buy' from 'neutral' and raised the target price to ¥15,000 from ¥8,400.
“We take a favuorable view of high growth prospects for the company as a manufacturer of two promising Alzheimer's drug candidates and Lenvima, for use in combination with cancer immunotherapy Keytruda,” Nomura analysts wrote in a report to clients.
The broader Topix jumped 1.1 per cent to 1,709.25, with all of its 33 subsectors in positive territory.
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