The Japanese stock market opened higher on Monday, with investors tracking Wall Street cues and picking up stocks in early trading. The U.S. jobs data and the stress tests results indicating the fairly sound financial position of major U.S. banks contributed to the early surge. Participants were also betting on hopes of a recovery in the Chinese economy ahead of release of producer and consumer price indexes.
However, with the mood turning a bit cautious subsequently, the market has pared its early gains and is currently trading lower. The benchmark index Nikkei 225, which moved past 9,500 for the first time in six months, slipped into the red and is currently trading at 9,408, down 25 points over its previous close.
Major foods stocks are trading firm with sharp gains. Construction stocks are exhibiting a mixed trend. Textiles, chemicals and pharmaceuticals stocks are trading mostly firm.
Oil stocks are trading higher and steel stocks are also up sharply. A fair amount of buying is happening in metals, machinery and shipbuilding space.
Among automobile stocks, on concerns over the company suffering a possible net loss of 550 billion yen in the year ending March 2010, shares of Toyota Motor Corp. fell sharply in early trading, losing over 2%. Suzuki Motor Corp is trading sharply higher. Isuzu Motors, Hino Motors and Nissan Motor are up with modest gains.
Toshiba Corp. is trading 3% up following the company announcing a plan to raise capital by about 500 billion yen. With this increase, the company intends to accelerate its restructuring efforts, cutting unprofitable electronics and semiconductor products and bolstering its nuclear power plant business.
Bank stocks are trading firm with Sumitomo Mitsui Financial Group, Resona Holdings Inc., Mitsubishi UFJ Financial Group, Mizuho Financial Group and Shinsei Bank posting strong gains. Shizuoka Bank and Mizuho Trust & Banking Co. are also trading sharply higher.
In the currency market, the Yen is trading at 98.43 to the U.S. dollar.
Among other markets in the Asia-Pacific region, Australia, Singapore and Korea are currently trading weak. The New Zealand market is up marginally. The stock market in Taiwan is trading firm with the Taiwan Weighted index recording a gain of 0.19%.
On Friday, stock markets across the Asia-Pacific region had closed mostly higher, reacting positively to the U.S. stress test results. Japan's benchmark Nikkei 225 Index closed up 0.5 percent, at a six-month closing high.
European stocks also turned in strong performances, although they ended the session off their best levels of the day. The U.K.'s FTSE 100 Index rose 1.4 percent, while the French CAC 40 Index and the German DAX Index closed up 1.9 percent and 2.3 percent, respectively.
Better than expected jobs data and a positive reaction to the results of the financial stress tests lifted stock prices on Wall Street Friday. Despite some profit taking at higher levels, the major averages ended the session on a high note. The Dow closed up 164.80 points or 2 percent at 8,574.65, the Nasdaq closed up 22.76 points or 1.3 percent at 1,739.00 and the S&P 500 closed up 21.84 points or 2.4 percent at 929.23.
According to a report from the Labor Department, employment fell by 539,000 jobs in April following a revised decrease of 699,000 jobs in March. The decrease in employment marked the smallest drop in jobs since October of 2008.
While the decrease was smaller than the loss of 600,000 jobs expected by economists, upward revisions to the number of job losses in February and March partly offset some of the optimism about the labor market.
The Labor Department also said that the unemployment rate rose to 8.9 percent in April from 8.5 percent in March. With the increase, which came in line with economist estimates, the unemployment rate rose to a new 25-year high.
Traders also reacted positively to the official results of the government's stress tests of the nation's 19 largest financial firms, which were released after the close of trading on Thursday.
U.S. bank regulators said about half of the country's biggest financial institutions need to improve their capital positions in order to ensure that they can weather a further downturn in the economy. The results of the stress tests showed that 10 of the 19 banks tested need to raise a total of $74.6 billion. The banks involved in the exercise account for two-thirds of the assets and more than half of the loans in the U.S. banking system.
U.S. economic data is likely to attract some attention next week, with reports on retail sales, producer and consumer price inflation, and industrial production likely to be in focus. Traders are also likely to keep a close eye on the weekly jobless claims report.
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