RTTNews - The stock market in Japan continued its slide for the third successive session Wednesday on weak economic data that raised concerns about the pace of the economic recovery. Stronger local currency and softer commodity prices dragged the market down on concerns about recovery.
In the U.S., stocks ended in negative territory following a sharp decline in commodity prices in a late reaction to the acknowledgment by Vice President Joe Biden in an interview on Sunday that the Obama administration misread the economy. The uncovering of yet another Ponzi scheme by the SEC involving Dallas businessmen to the tune of $485 million also unsettled the investors.
Moderately strong demand for the Treasury's auction of $35 billion worth of three-year notes earlier in the day had little impact on trader sentiment, as they preferred to lock-in gains in a late sell-off and moved to the sidelines amid expectations for yet another stimulus package from the U.S Government. Technology, energy and oil stocks took the beating amid concerns about slackening demand and bleak future. The dollar continues to weaken against the Japanese Yen, while it strengthened against the euro and the pound.
The Dow fell 161.27 points or 1.9% to 8,164, the Nasdaq closed down 41.23 points or 2.3% at 1,746, and the S&P 500 dropped by 17.69 points, or 2% at 881.
The Nikkei 225 Average opened sharply lower at 9,549 compared to its previous close of 9,648 taking cues from Wall Street where a late-day sell-off dragged the indices into negative territory. Unexpected drop in core production orders for May and strengthening of the local currency against the greenback also impacted trading ahead of the earnings season in the U.S. The index ended the day in the red with a loss of 227.04 points, or 2.35% at 9,421. The broader Topix Index of all first section issues issues fell 20.59 points, or 2.3%, to 889.
On the economic front, the Cabinet Office revealed that core machinery orders declined 3.0% in May compared to April, marking the third straight decline and signaling a continued slowdown in business activity as companies curtail capital spending. Another report revealed that the country recorded an overall trade surplus of 1.302 trillion yen in May.
Light sweet crude oil price for August delivery ended at $62.12, representing a loss of $0.81 a barrel in Asian trading, after having shed about $1.13 a barrel in the previous session to $62.93 a barrel on concerns about weak demand.
Exporters declined following a stronger local currency. Honda Motor declined 4.02%, Canon Inc fell 1.42%, and Konica Minolta lost 2.71%.
Banking stocks declined following data showing slower growth rate in lending operations. Mitsubishi UFJ lost 3.40%, Mizuho Financial fell 1.85%, Bank of Yokohama slumped 5.27%, Resona Holdings slipped 1.17% and Sumitomo Mitsui declined 4.20%.
Among metal stocks, Pacific Metals Co., declined 3.33%, Nippon Light Metal Co lost 4.04%, and Sumitomo Metal Mining fell 2.88%.
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