RTTNews - After opening weak as exporters retreated on a stronger yen, the Japanese market edged higher on Monday on the back of some modest buying in select bank, pharma and securities stocks. However, after trading in positive territory for a while, the Nikkei slipped into the red on strong resistance at higher levels and is currently trading with a modest loss.
Foods, real estate stocks are mostly trading higher. Machinery, steel, non-ferrous stocks are exhibiting a mixed trend. Automobiles stocks are mostly trading lower and not much buying is taking place in the chemicals space as well.
The Japanese benchmark index Nikkei, which rose to 9,822.88 after touching a low of 9,766 in early trades, is currently down in the red at 9,765, down nearly 20 points or about 0.2% from its previous close. The Nikkei had ended Friday's session at 9,786, recording a gain of 82.54 points or 0.85%.
On the economic front, a government survey showed large Japanese firms were less pessimistic about the economy in the April-June quarter than they were during the previous period. The large company business sentiment index of a survey, jointly conducted by the Ministry of Finance and Cabinet Office, was at minus 22.4 in the second quarter, better than minus 51.3 in the previous quarter. The reading indicates most companies are less downbeat on business conditions. The index is calculated by subtracting the percentage of companies saying the economy is worsening from the percentage seeing improvement.
The survey's result suggests that recent pickups in production and exports has buoyed sentiment, increasing expectations that the Bank of Japan's closely watched Tankan business sentiment survey, due on July 1, may also point toward a bottoming out.
The outlook index for big companies stood at minus 2.6 for the July-September, and plus 8.7 for the October-December period.
However, the mood remains quite cautious with investors looking for further cues from U.S. The crucial U.S. Federal Reserve meet and the outlook on U.S. interest rates are among the major factors that are expected to dictate the trend in global markets this week.
Shares of Nissan Motor Co. rose sharply in early trading today on reports the company will mass-produce electric cars in the U.S. The facility will be able to roll out as many as 100,000 vehicles a year by 2012. The stock is currently up by close to 4%.
Hitachi Transport System is down in the red with a sharp loss on concerns over a likely drop in the company's operating profit. The company is expected to log a 48% drop in group operating profit to 1.8 billion yen for the three months ending June 30, weighed down by soft demand for logistics support. Sales are seen declining 10% to slightly under 80 billion yen. All-in-one orders for handling clients' logistics needs, which account for three-fourths of overall sales, have been slow to recover in the autoparts sector. Orders from producers of daily goods and apparel have also been weak.
Shares in Nitori Co. is gaining significant ground this morning following an impressive report card from the company. The furniture store chain operator disclosed earnings on Friday for the March-May quarter and upgraded its forecast for the full year through February 2010. With the firm's low-price strategy successfully luring penny-pinching customers, sales for the last quarter increased 15% year on year to 76.7 billion yen, with net profit surging 36% to 8.8 billion yen. The company has boosted its full-year net profit projection from a 2% increase to 18.7 billion yen to a 14% jump to 20.9 billion yen. Despite coming off its high, the stock is up by as much as 3.5% at present.
Furukawa Electric is trading sharply higher on reports the firm and Fuji Electric Holdings will develop a next-generation power chip that will improve the performance of hybrid vehicles. The gallium nitride chip the companies will develop will effectively control battery use, allowing cars to travel greater distances than those powered by conventional silicon-based chips. Shares of Fuji Electric Holdings are also seen trading firm.
In the currency market, the yen is trading at 96.07 to the U.S. dollar. In early trading today, the U.S. dollar was quoting in the lower 96 yen range, slightly lower than its late Friday quotes in New York.
Among other markets in the Asia-Pacific region, Australia, New Zealand, Korea and Taiwan are trading modestly higher while the Singapore and Shanghai markets are currently trading flat.
On Friday, stocks ended on a mixed note on Wall Street despite a fairly strong start. Trading was lackluster for most of the session as traders stayed away amid a lull in economic data. The Dow closed down 15.87 points at 8,539.73, the Nasdaq closed up 19.75 points at 1,827.47 and the S&P 500 closed up 2.83 points at 921.20.
Stock markets across the Asia Pacific region had ended Friday's session with solid gains. Major European markets also finished the day higher. The French CAC 40 Index and the U.K.'s FTSE 100 Index closed up 0.9 percent and 1.5 percent, respectively, while the German DAX Index closed just above the unchanged mark.
After posting modest gains in the previous two sessions, crude oil prices had closed below US$70 on Friday on the New York Mercantile Exchange amid concerns that supplies will outweigh demand. Light sweet crude for July delivery settled at US$69.55 per barrel, down US$1.82, its lowest close since June 8.
Prices had reached as high as US$72.30 Friday amid early worries over violence in Nigeria. The Movement for the Emancipation of the Niger Delta claimed it has blown up an Agip pipeline that delivers to a Brass export terminal. Two days earlier, the group attacked a Royal Dutch Shell pipeline.
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