RTTNews - The stock market in Japan snapped a 6-day winning streak and ended in negative territory on Thursday, mirroring the losses on Wall Street, where the major indices ended weaker following weak economic data on the services sector and employment. Lower commodity prices also influenced the market and investors preferred to take profits ahead of the release of key economic data from the U.S.
In the U.S., a report released by Automatic Data Processing Inc., or ADP, revealed that non-farm private employment fell by 532,000 jobs in May following a revised decrease of 545,000 jobs in April. Economists had expected a decrease of about 525,000 jobs compared to the decline of 491,000 jobs originally reported for the previous month.
A separate report from the Institute for Supply Management revealed that its index of activity in the service sector rose to 44.0 in May from 43.7 in April, although a reading below 50 indicates a continued contraction in the sector. Economists had been expecting a somewhat more notable increase to a reading of 45.0.
The Commerce Department, in a separate release, revealed a notable increase in factory orders in the month of April, but the increase came after a substantial decline in the previous month and was slightly below economist estimates.
The Dow closed down 65.63 points or 0.8% at 8,675, the Nasdaq closed down 10.88 points or 0.6% at 1,826, and the S&P 500 fell 12.98 points or 1.4% to 932.
The Nikkei 225 Average opened lower by more than 50 points at 9,692, reflecting the losses on Wall Street. The market recovered smartly and moved above the unchanged line in the morning session to 9743. However, profit taking in the afternoon ahead of a key non-farm employment report in the U.S on Friday and a lack of buying interest dragged the index down to close at 9,669, down 72.71 points, or 0.75%. The broader Topix Index of all first section issues also edged down 3.51 points, or 0.38% to close at 911.
On the economic front, the Ministry of Finance stated that Japanese companies reduced their spending on plant and equipment in the first quarter of 2009. Capital spending plunged 25.3% during the Jan-Mar period in 2009, following a 17.3% decline in the last 3 months of 2008. Economists were expecting a 30% fall in investment.
Crude oil prices recovered from a slump in the international market on Wednesday and ended with a gain of 57 cents at $66.19 a barrel in Asian trading. Light sweet crude for July delivery closed sharply lower at $66.12 in New York Mercantile Exchange on Wednesday on weaker economic data in the U.S.
Shipping stocks ended weaker on profit taking following their recent gains. Kawasaki Kisen lost 3.51%, Nippon Yuesen fell 4.52%, and Mitsui OSK Lines shed 3.41%.
Mixed trend was witnessed among automotive stocks. Mitsubishi Motors surged up more than 15% following news that the company is planning to sell plug-in electric vehicles in the country in the next 4 years. Nissan Motor Co., gained 1.68%. However, Toyota Motor lost 2.31%, and Honda Motor fell 1.22%, on profit taking.
Financial stocks ended in positive territory. Mitsuibishi UFJ gained 1.30%, Mizuho Financial added 1.28%, Resona Holdings advanced 2.64% and Sumitomo Mitsui rose 1.08%. Brokerage Nomura Holdings advanced 3.11% after Fitch Ratings affirmed ratings for debt in the U.K and U.S.
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