RTTNews - The stock market in Japan ended in positive territory on Wednesday, taking cues from Wall Street, where better-than-expected consumer confidence reading led the markets higher on hopes of revival in the economy. Positive Japanese trade data for April also lifted sentiment, as the pace of slowdown in Japanese exports has slowed down, supporting the recovery theme.
U.S. consumer confidence showed a substantial improvement in the month of May, according to a report released by the Conference Board on Tuesday, with the consumer confidence index rising to its highest level in eight months. The report showed that the consumer confidence index rose to 54.9 in May from an upwardly revised 40.8 in April. Economists had expected the index to edge up to 42.6 from the 39.2 originally reported for the previous month. Earlier, a report released by Standard & Poor's revealed that home prices continued to show record declines in the first quarter of 2009, suggesting that the recent signs of revival in the housing market had not yet resulted in a turnaround in prices.
Traders largely shrugged off the data, however, citing the lagging nature of the numbers and choosing to focus on the encouraging consumer confidence data. The Dow closed up 196.17 points or 2.4% at 8,473, the Nasdaq rose 58.42 points or 3.5% to 1,750 and the S&P 500 closed up 23.33 points or 2.6% at 910.
The Nikkei 225 Average opened sharply higher at 9,427 compared to its previous close at 9,311, led by positive cues from Wall Street, and continued to surge ahead to a high of 9,491 in morning session. Positive economic data on the home front, which signaled that exports may see a modest recovery from the recent slump, as well as the weakening of the local currency against the US greenback also lifted the sentiment. Due to a lack of buying support at higher levels, the index gave back some of its gains and ended the session with a gain of 128 points, or 1.37%, at 9,439.
On the economic front, the Ministry of Finance revealed that the country registered a merchandise trade surplus of 69.0 billion yen in April, compared to expectations of a trade deficit of 69.5 billion yen, marking the third straight month of surplus. Exports plummeted 39.1% year-over-year, lower than expected annual decline of 41.9%, while imports fell 35.8% on an annual basis. On a seasonally adjusted basis, exports were up 1.9% in April, the report revealed.
The minutes released by Bank of Japan for its recent meeting on April 30 revealed that Board members felt that there was no need for additional policy steps to combat the economic slowdown. The number of downgrades among Japanese firms may continue to increase, the board said, also cautioning not to expect a sharp rebound in commodities. The board also decided to wait and watch with interest for the results of the U.S. stress tests on financial institutions. The U.S. economy also needs additional time to bottom out, the board said.
Nikon Corp advanced 3.48% after the company announced plans to trim its work force by 1,000 employees in its effort to reduce costs. The company expects to report a loss in 2009 after reporting profit in 2008, impacted by the downturn in the global economy. The company also said it intends to return back to profit in 2010.
Seven & I Holdings lost 1.47% after the company revealed that it would shut down the Sapporo outlet of group company Seibu Department Stores Ltd. by the year-end and sell the property after its closure. The Department store reported a 27% drop in operating profit year-over-year, hurt by a sharp decline in consumer spending
Among banking stocks, Mitsubishi UFJ advanced 2.13%. Mizuho Financial gained 1.31%, Resona Holdings edged up 0.07%, and Sumitomo Mitsui added 0.80%.
Crude oil price for July delivery closed the Asian session higher by 26 cents at $62.71 a barrel. On Tuesday, oil prices climbed to a new six-month high, as traders viewed a jump in U.S. consumer confidence as a signal of an economic rebound and increased energy demand. New York's main futures contract, light sweet crude for delivery in July, rose 78 cents to end at $62.45.
Notwithstanding the bounce in oil prices, oil stocks ended mixed. Inpex lost 1.67% and Nippon Oil shed 1.70%, but Showa Shell advanced 2.12%.
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