RTTNews - Despite a positive start and a subsequent surge, the Japanese market has pared its gains now with the fall in volume and value of trade in the month of May weighing on the market to an extent.
The benchmark index Nikkei, which rose to 9,608 in early trading, is currently down in the red at 9,534, down by around 16 points or 0.17% from its previous close.
On Tuesday, the Nikkei had ended with a big loss of 276.66 points or 2.82% at 9,550, on weak cues from Wall Street, lower commodity prices and a gloomy outlook for the global economy.
On the economic front, Japan's Finance Ministry said that Japan posted a 299.8 billion yen merchandise trade surplus in May, making the fourth straight month of surplus. The figure was better than the 214.6 billion yen surplus expected by economists. Exports in May fell 40.9% from a year earlier, the eighth straight month of decline, on weak overseas demand for cars, steel and electronic parts, the data showed. Imports dropped 42.4% in May, marking the seventh straight month of decrease.
Construction, textiles, real estate stocks are trading mixed, while automobile and bank stocks are also seen exhibiting a mixed trend. Foods, chemicals, pharmaceuticals, steel, non-ferrous metals and machinery are mostly trading firm. Insurance and securities stocks are also seen attracting some buying.
Nissan Motor Co. rose higher following the U.S. government agreeing to offer a low-interest loan of 1.6 billion dollars, or 150 billion yen, to support the company's development of eco-friendly vehicles. After falling nearly 5% on Tuesday, the stock moved up sharply this morning on technical rebound and the positive news flow. However, after initial buoyancy, the stock pared its gains and is currently trading in the red.
Showa Shell Sekiyu KK shares rose sharply Wednesday, climbing 9.6% to hit a year-to-date high of 1,077 yen, on reports that the firm plans to set up solar power facilities in Saudi Arabia jointly with Saudi Arabian Oil Co., attracting buying from investors targeting solar-related issues. On May 26, Showa Shell had announced its aim to generate sales of 50 billion yen from the solar cell business in fiscal 2014, half of its group pretax profit target for the full year. The stock is currently trading up 8.2% at 1,064 yen.
Trading weak for the fourth successive day, Seven & i Holdings is down by over 2% this morning. The recent fiasco over moves by Seven-Eleven Japan Co., the firm's convenience store chain unit, to ban discount sales of perishable items such as boxed lunches appear to be driving investors to the sidelines, as the convenience store business is the firm's cash-cow. Seven-Eleven Japan said Tuesday that from July, it will shoulder 15% of the costs incurred by its franchise stores for disposing of unsold boxed lunches.
In the currency market, the U.S. dollar traded in the lower 95 yen range early Wednesday in Tokyo, up slightly from its levels in New York overnight. Currently, the yen is trading at 95.37 to the U.S. dollar.
Among other markets in the Asia-Pacific region, Australia, New Zealand and Korea are trading lower. The Shanghai, Singapore and Taiwan markets are trading in positive territory with modest gains. Stock markets across the Asia-Pacific region had ended Tuesday's session with steep losses.
On Tuesday, stocks ended little changed on Wall Street after a choppy ride. Volumes were thin as traders mostly stayed on the sidelines ahead of the release of the Federal Reserve's outlook on interest rates. A lower than expected rise in existing homes sales also weighed to an extent.
The major averages finished on opposite sides of the unchanged mark by only mild margins, unable to sustain any notable moves on the day. While the S&P 500 finished up by 2.06 points or 0.2 percent at 895.10, the Dow slipped by 16.10 points or 0.2 percent to 8,322.91, and the Nasdaq dropped by 1.27 points or 0.1 percent to 1,764.92.
Major European markets finished the day on opposite sides of the unchanged line. The French CAC 40 Index and the U.K.'s FTSE 100 Index slipped by 0.2 percent and 0.1 percent, respectively, while the German DAX eked out a 0.3 percent gain.
Oil jumped higher on Tuesday as investors looked ahead to the Energy Information Administration's weekly inventory report, which is expected to show a drop in stockpiles on Wednesday. Light sweet crude for August delivery rose to US$69.24 per barrel, up US$1.74 on the session. Prices rallied as high as US$69.68 after falling to as low as US$ 66.37.
With more economic news to follow and the outcome of the Federal Open Market Committee's meeting due, the mood is likely to be cautious on Wednesday.
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