RTTNews - The Japanese stock market opened on a buoyant note Monday as investors went on a buying spree in early trading following the thumping victory of the Democratic Party of Japan in the lower house election. Better-than-expected industrial output data also contributed to the upbeat mood.
As stocks across various sectors rallied sharply, the benchmark index Nikkei 225 shot up by over 200 points to an eleven-month intra-day high of 10,767 within minutes of commencement of trading this morning.
However, with participants trimming down their positions significantly at higher levels, the buoyancy proved short-lived and the benchmark plunged into the red and is currently trading at 10,507, down 26.3 points or 0.25% from its previous close. The Nikkei had ended at 10,534 with a gain of 60 points, or 0.57%, on Friday.
Automobile and bank stocks moved up sharply in early trading but are off their highs now due to strong resistance. Chemicals, pharmaceuticals, machinery and non-ferrous metals stocks also had a good spell in positive territory before drifting lower.
Pigeon Corp. shares rose as much as 230 yen to hit a year-to-date high of 3,980 yen this morning, as investors bought the shares on expectation of improved earnings. On Friday, the maker of baby-care goods upgraded its group operating profit outlook for the year ending January, stoking buying interest. The stock is currently trading up by over 3%.
On the economic front, Japan's industrial output rose 1.9% from June to a seasonally adjusted 82.4 in July, the fifth straight month of increase, the Ministry of Economy, Trade and Industry said Monday. The figure exceeded the average market prediction of a 1.6% rise. The shipment index climbed 2.3% to 83.6 and the inventory gauge fell 0.2% to 95.1, sending the inventory to shipment index down 4.1% to 123.5. Looking ahead, the government forecast that the headline index will rise 2.4% in August, and 3.2% in September.
According to another report from the same ministry, domestic retail sales fell 2.5% year on year to 11.279 trillion yen in July, the 11th straight month of decline. Sales at large outlets dropped 7% to 1.736 trillion yen. Same-store sales at large outlets fell 8.4%, with department store sales down 11.8% and supermarket sales down 6%. Convenience store sales fell 5.1% to 715.6 billion yen, marking the first decline since the statistics began to be compiled. Same-store sales dropped 7.5%.
In the currency market, the U.S. dollar traded at the lower 93 yen level this morning, down from its late Friday quotes in New York, after Japan's main opposition party swept to a historic victory in Sunday's general election. In early trading, the dollar fetched 93.37-42 yen against Friday's close of 93.56-66 yen in New York and 93.92-93 yen in Tokyo.
The yen is currently trading at 92.69 to the U.S. dollar.
Among other markets in the Asia-Pacific region, Australia, New Zealand and Taiwan are trading higher, while Singapore and Korea are exhibiting weakness. Stock markets across the region had closed mostly higher on Friday.
On Wall Street, stocks turned in a lackluster performance on Friday after an initial upward move and eventually ended the session on a mixed note.
Traders largely shrugged off the day's economic data, including a report from Reuters and the University of Michigan that showed their final consumer sentiment index reading for August came in at 65.7 compared to the mid-month reading of 63.2.
In a separate report, the Commerce Department said that personal income was nearly unchanged in July following a revised decrease of 1.1% in June. Economists had expected income to increase by 0.1% compared to the 1.3% drop originally reported for the previous month.
The Dow ended lower by 36.43 points, or 0.4%, at 9,544.20, the Nasdaq closed up by 1.04 points, or 0.1%, at 2,028.77 and the S&P 500 drifted down by 2.05 points, or 0.2%, to 1,028.93.
Major European markets also moved higher over the course of trading on Friday, with the French CAC 40 index and the German DAX index advancing 1.2% and 0.9%, respectively, while the U.K.'s FTSE 100 index closed up 0.8%.
Oil prices closed modestly higher on Friday, ending the session well off the highs for the session but still extending the upward move seen in the previous session. Despite the continued increase, oil remains well off the ten-month high set earlier in the week.
After surging to US$73.52 a barrel during the session, crude for October delivery gave up some gains and closed up US$0.24 at US$72.74 a barrel.
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