RTTNews - The Japanese stock market opened lower on Thursday as rising U.S. Treasury yields and the likely bankruptcy of U.S. automaker General Motors Corp. and its impact on Japanese firms hurt sentiment.
The Nikkei 225 index opened nearly a per cent down at 9,353.33, but has wiped off most of its losses on strong buying at lower levels in a few frontline stocks. The index is currently trading at 9,420.63, down 18.14 points from its previous close. On Wednesday, the Nikkei had ended with a gain of 128 points at 9,439.
Steel stocks are trading mixed. Non-ferrous metals, machinery and electric machinery stocks are also exhibiting a mixed trend.
Chemicals, pharma and oil stocks are mostly trading lower. Automobile and bank stocks are trading weak, though most of them have come off their early lows. Real estate, foods and textiles are also seen displaying weakness. Communications stocks are edging higher.
Nippon Steel rose sharply on expectations of improved profitability following reports that the company will raise operating rates of its steelworks from the current average of 50% to 60%- 70% as early as July on increased demand for steel products. The stock is currently trading more than 2% up over its previous close.
Shares of securities firm Nomura Holdings are struggling for support. The stock fell sharply this morning following a rating downgrade by Moody's Investors Service. The agency has downgraded the rating of the firm to Baa2 from A3, citing the possibility that Nomura Holdings' fundraising costs may increase.
A majority of 114 Japanese companies, 38 of them listed entities, that have some dealings with General Motors Corp. group companies are likely to face difficulty in recovering debt in the event the U.S. auto giant files for bankruptcy.
According to a note by Teikoku Databank Ltd., 102 Japanese companies, including Bridgestone Corp., Denso Corp. and a few others with annual sales of more than 1 trillion yen, might not be able to recover at least some of their accounts receivable with GM if it goes bankrupt.
In the currency market, the U.S. dollar traded in the upper 95 yen range early Thursday in Tokyo, up from its levels in New York overnight. The yen is currently trading at 95.78 to the U.S. dollar.
Among other markets in the Asia-Pacific region, Australia, New Zealand and Singapore are trading weak. The Korean market is trading modestly higher.
On Wednesday, Wall Street saw some heavy selling as investors chose to take profits amid a mixed report from the housing market and the Treasury Department's auction of $35 billion worth of 5-year notes that attracted moderately strong demand.
The report from the National Association of Realtors said that existing home sales rose 2.9 percent to an annual rate of 4.68 million units in April from a downwardly revised rate of 4.55 million units in March. Economists had expected sales to rise to 4.66 million unit from the 4.57 million originally reported for the previous month.
While the pace of existing home sales increased compared to the previous month, total housing inventories at the end of April represented a 10.2-month supply compared with a 9.6-month supply in March.
The major averages all closed firmly in the red, just off their worst levels of the day. The Dow closed down 173.47 points or 2.1 percent at 8,300.02, the Nasdaq closed down 19.35 points or 1.1 percent at 1,731.08 and the S&P 500 closed down 17.27 points or 1.9 percent at 893.06.
Major European markets posted more modest gains, with the U.K.'s FTSE 100 Index finishing up by 0.1 percent, while the French CAC 40 Index and the German DAX closed up 0.8 percent and 0.3 percent, respectively.
Crude oil rallied to a fresh multi-month high on Wednesday amid hopes energy demand will continue to improve. Traders await the results of Organization of Petroleum Exporting Countries meeting as well as Department of Energy inventory data tomorrow.
Light sweet crude oil for July delivery rose to its highest close since November 5, rallying to $63.45, up $1 on the session.
Data on weekly job claims, new home sales and the outcome of the OPEC meet will give direction to the U.S. market on Thursday.
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