RTTNews - The Japanese market opened firm on Thursday on strong cues from Wall Street where stocks had surged higher overnight after the U.S. Federal Reserve said it saw signs of the recession-mired U.S. economy stabilizing. The weakening yen is also contributing to the rally in Tokyo this morning.
The Japanese benchmark index Nikkei, which moved on to 10,525, ended the morning session at 10,511, up 76.14 points or 0.73% over its previous close. The Nikkei had ended lower by 150.46 points or 1.42% at 10,435 on Wednesday.
Bank, automobile, steel, non-ferrous metals and machinery stocks were mostly trading higher. Chemicals and pharmaceuticals stocks also had a good outing this morning.
According to a report from the Ministry of Finance, overseas investors were net buyers of Japanese stocks for the fourth straight week last week, purchasing a net 292.9 billion yen worth of shares. However, the net figure was smaller than the previous week's 424.7 billion yen, as the recent stock rally likely prompted overseas players to lock in profits.
Astellas Pharma Inc. said today the U.S. District Court rejected its appeal against the Food and Drug Administration's decision earlier this week on immune system drugs. The Tokyo-based pharmaceutical maker had petitioned the FDA to instigate more rigid procedures for prescribing generic versions of its Prograf drug, an oral immunosuppressant for organ transplant recipients. Astellas said the court in Washington D.C. also rejected its request for a preliminary injunction keeping the FDA from approving generic versions of Prograf while the court reviewed the case.
Astellas said in a statement it is still reviewing future options following the decision. The pharma stock was up nearly a percent at the end of the morning session.
Nippon Sharyo Ltd. shares opened bid-only this morning before briefly soaring 39 yen to 638 yen, the stock's highest level since July 1997. The jump in the train maker's stock came on the back of reports that the country will use Japan's bullet train technology to build a high-speed railway connecting northern city of Hanoi and the southern commercial hub of Ho Chi Minh City. Nippon Sharyo manufactures N700-type shinkansen cars for Central Japan Railway Co. to which the Vietnamese state-owned firm has already dispatched engineers, according to the report. The stock was trading up by over 5% when the morning session drew to a close.
Other railway stocks, including Kawasaki Heavy Industries, Kinki Sharyo, Toyo Electric and Nippon Signal were also trading firm.
In the currency market, the U.S. dollar traded at the lower 96-yen level early Thursday in Tokyo, up slightly from its levels overnight in New York. In early trading this morning, the dollar fetched 96.13-18 yen against Thursday's close of 96.00-10 yen in New York and 95.25-26 yen in Tokyo. The yen is currently trading at 96.01 to the U.S. dollar.
Among other markets in the Asia-Pacific region, Australia, Hong Kong, New Zealand, Singapore and Taiwan are up sharply with their benchmark indices moving up by 1.2% - 1.7%. Korea is also trading firm. The Shanghai market, however, is trading in negative territory. Stock markets across the region had finished markedly lower on Wednesday.
On Wall Street, shrugging off a report that showed U.S. trade deficit widened in June, traders stayed bullish on Wednesday after the Federal Open Market Committee announced that it was maintaining the target range for its benchmark federal funds rate at zero to 0.25% and repeated its belief that low rates will persist for what it calls an extended period. The central bank added that economic activity is leveling out.
The central bank also said it will gradually slow the pace of treasury purchases and expects that the full amount of US$300 billion will be purchased by the end of October.
Going into the meeting, the Fed was universally expected to leave rates unchanged, but there was some speculation that the central bank could announce the end of its program to buy treasury bonds, a move it had undertaken to further stimulate the economy.
The Dow jumped by 120.16 points or 1.3% to 9,362, the Nasdaq moved up by 28.99 points or 1.5% to 1,999 and the S&P 500 surged 11.46 points or 1.2% to 1,006.
Major European markets closed considerably higher, with the French CAC 40 index and the German DAX index rising by 1.5% and 1.2%, respectively, while the U.K.'s FTSE 100 index posted a gain of 1%.
Oil prices closed higher, lifted by a Wall Street rally as the market shrugged off a larger-than-expected jump in US crude inventories that fueled worries about weak demand. Light sweet crude for September delivery, settled at US$70.16 a barrel, up 71 cents from Tuesday's close.
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