Stock prices rallied higher in the Japanese stock market on Thursday with strong cues from Wall Street and on a sharp rise in industrial output in March. Japanese industrial output rose for the first time in six months, increasing 1.6% month-over-month, bigger than the 0.5% increase expected by economists.
The benchmark stock index Nikkei 225, which opened at 8,616 and rose to 8,845 earlier, is currently trading at 8826, up 332.21 points or nearly 4% over its previous close.
Among the stocks in the automobile sector, Toyota Motor Corp., Suzuki Motor, Hino Motors and Mazda Motor are trading firm with impressive gains. Honda Motor is up with a sharp gain following an announcement from the company that the group's operating profit held in the black in fiscal 2008. The automaker expects a 95% drop in fiscal 2009, all the way down to 10 billion yen.
Among those from the banking space, The Shizuoka Bank, Resona Holdings, Mitsubishi UFJ Financial Group, The Chiba Bank and Sumitomo Trust and Banking are trading stronger. The Bank of Yokohama and Mizuho Financial Group Inc. are also up in positive zone with sharp gains.
Among pharmaceuticals stocks, Astellas Pharma Inc., Takeda Pharmaceuticals Co., Chugai Pharmaceutical and Daiichi Sankyo are trading higher. Steel, insurance and communication stocks are also in strong demand today.
In the shipbuilding space, Kawasaki Heavy Industries and Mitsui Engineering are trading firm with sharp gains.
In the currency market, the Yen is trading at 97.67 to the U.S. dollar.
Among the other markets in the Asia- Pacific region, Australia, New Zealand, Singapore, South Korea and Taiwan are trading firm with strong gains. The benchmark indices of these markets are up 2% - 6% at present. The Malaysian stock market is trading modestly higher.
The Japanese market had remained closed on Wednesday on account of Showa Day. Other stock markets across the Asia-Pacific region had ended on a high note as traders went bargain hunting.
The major European markets also experienced substantial strength, with the U.K.'s FTSE 100 Index advancing 2.3 percent, while the French CAC 40 Index and the German DAX Index rose 2.2 percent and 2.1 percent, respectively.
In the U.S., GDP numbers fell short of expectations, but Wall Street investors shrugged off the data and picked up stocks so consistently that the market stayed in positive territory right through Wednesday.
The advance first-quarter GDP report indicated that the U.S. economy fell 6.1% between January and March, sharper than an expected drop of 4.7%. However, on hopes economic conditions will improve following a sharp rise in consumption level, participants remained active buyers during the session. Personal consumption climbed a better-than-expected 2.2% after dropping 4.3% in the fourth quarter, as the consensus called for an increase of 0.9%.
The FOMC kept the federal funds rate unchanged at 0.00% to 0.25%, as expected. Its quantitative easing targets were also unchanged. The FOMC's latest policy statement noted that household spending will continue to be pressured by job losses, decreased housing wealth, and tight credit conditions. The committee expects continued weak economic activity, but feels its policy actions combined with fiscal stimulus should help contribute to a gradual resumption of sustained economic growth.
Hope for an economic recovery in the second half of this year helped prop up oil prices. Oil prices gained 2.2% to close at $51.00 per barrel, despite a massive build of 4.05 million barrels during the week ending April 24.
On the corporate front, Bank of America was on investors' minds during the session as Chairman and Chief Executive Ken Lewis faced severe shareholder anger at the bank's annual meeting.
Ken Lewis was stripped of his title as chairman of Bank of America Corp. on Wednesday, but shareholders allowed him to retain the title of Chief Executive Officer. In a close vote, shareholders moved to split the two leadership positions, approving board member Walter Massey as new BofA Chairman.
The Dow closed up 168.79 points or 2.1 percent at 8,185.73, the Nasdaq closed up 38.13 points or 2.3 percent at 1,711.94 and the S&P 500 closed up 18.48 points or 2.2 percent at 873.64. With the upward moves, the Nasdaq ended the session at its best closing level in nearly six months, while the Dow set a more than two-month closing high and the S&P 500 set a three-month closing high.
In the bond market, treasuries showed a notable decline following the Fed announcement, closing near their lows of the day. Subsequently, the yield on the benchmark ten-year note ended the session up 9.4 basis points at 3.096 percent.
Earnings will determine the U.S. market's direction on Thursday with nearly 150 companies scheduled to announce their latest results. Initial jobless claims data and personal spending data for March are scheduled to be released.
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