RTTNews - The stock market in Japan advanced higher on recovery hopes and ended with a gain or more than 2% on Wednesday, led by banks and commodities on higher commodity prices in the international market. Resilience displayed by the U.S. markets on Tuesday and increasing optimism about global recovery more than overshadowed the weak economic data on machinery orders. Positive sentiment prevailing across the Asian markets also influenced market sentiment and the benchmark index ended near the psychological 10,000-mark
In the U.S., the Treasury Department announced that 10 of the largest U.S. financial institutions that borrowed money from the Treasury under the TARP funding are planning to repay their loans. JP Morgan Chase (JPM), U.S. Bancorp (USB) and Bank of New York Mellon (BK) were among the banks that will repay a total of $68 billion. An announcement from the Treasury Secretary Timothy Geithner that he plans to begin reforming the U.S. regulatory system soon also augured well , which saw some life in the stock market in late afternoon Tuesday after witnessing choppy trading in the morning session.
Earlier traders were presented with mixed economic data. A report from the Commerce Department revealed that U.S. wholesale inventories fell by a little more than expected in the month of April. The report showed that wholesale inventories fell 1.4% in April following a revised 1.8% decrease in March. Economists had expected inventories to decrease by about 1.1% compared to the 1.6% drop originally reported for the previous month. Additionally, the Commerce Department said that wholesale sales edged down 0.4% in April after falling by a more significant 2.4% in March. Wholesale sales were down 19.5% compared to the same month a year ago.
The tech-heavy Nasdaq closed up by 17.73 points or 1% at 1,860 and the S&P 500 rose 3.29 points or 0.4% to 942, while the Dow slipped by 1.43 points or 0.02% to 8,763.
The Nikkei 225 Average opened sharply higher at 9,833 compared to its previous close of 9,787, and continued to move in the northward direction, led by resource stocks on higher commodity prices in the international market. Weak machinery orders data did not have any major impact on the stock movement. The weakening of the local currency against the U.S as well as positive trading across other Asian markets also supported the market. The index finally closed at the day's high of 9,991, representing a gain of 205 points, or 2.09%. The broader Topix Index of all first section issues also advanced to 937, with a gain of 18.77 points, or 2%.
On the economic front, the Cabinet Office revealed that core machinery orders were down 5.4% month-over-month in April, falling to to a 22-year low of 688.8 billion yen. Economists were anticipating a 0.4% increase in machinery orders during April following the 1.3% decline in March and the 0.6% gain in February.
In a separate report, the Bank of Japan revealed that the price of domestic corporate goods in the country declined 0.4% in May compared to the previous month. Economists were anticipating a 0.3% drop for the month following the revised 0.6% decline in April and the 0.2% contraction in March.
Crude oil prices continued its northward march and ended higher with a gain of $1.06 at $71.07 a barrel in Asian trading. Light sweet crude for July delivery rose sharply to a seven-month high on higher demand and ended with a gain of $1.92 at $70.01 a barrel on the New York Mercantile Exchange on Tuesday.
Resource stocks led the gains on higher metal and oil prices. The second largest zinc smelting company in the country, Dowa Holdings soared more than 8.5% on higher metal prices.
Trading companies also advanced on higher commodity prices. Mitsubishi Corp., advanced 6.3% while Marubeni Corp. gained 5.29%.
Oil stocks surged after crude oil prices breezed past the $71 a barrel mark in Asian trading on expectations of higher demand. Among the stocks, Inpex gained 3.48%, Nippon Oil advanced 2.36% and Showa Shell rose 1.57%.
Shipping stocks resumed their rally following a brief pause in the past few sessions after brokerage Credit Suisse Group AG raised the outlook for marine transport companies from neutral to outperform on expectations that earnings will bottom out this year. Among the shipping companies, Kawasaki Kisen gained 6.40%, Mitsui O.S.K. Lines advanced 5.50% and Nippon Yusen rose 4.35%.
Kawasaki Heavy Industries gained the most after reporting that it has developed a new nickel-hydrogen battery, which can be recharged in less than 10 seconds and can be used in buses. The stock advanced 15.74%.
Financial stocks advanced on optimism about economic recovery. Mitsubishi UFJ gained 2.56%, Mizuho Financial Group surged 6.10%, Resona Holdings advanced 2.31% and Sumitomo Mitsubishi soared 5.65%.
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