Japanese Market Significantly Lower

The Japanese stock market is significantly lower on Friday, recouping some of the losses from early deals, with the benchmark Nikkei 225 above the 29,000 mark, following broadly negative cues overnight from Wall Street on reports US President Joe Biden plans to almost double the capital gains tax. Continuing concerns about the spike in daily domestic coronavirus infections and the possibility of lockdowns are also weighing on the market.

According to media reports, Japan reported a nationwide tally of more than 5,000 new cases for a second consecutive day on Thursday as the highly contagious variants drive a fourth wave of infections. The Japanese government is set to declare a state of emergency in Tokyo and the 3 western Japan prefectures of Osaka, Kyoto and Hyogo on Friday.

The benchmark Nikkei 225 Index is losing 160.16 points or 0.55 percent to 29,028.01, after hitting a low of 28,770.62 in early trades. Japanese shares closed sharply higher on Thursday.

Market heavyweight SoftBank Group is down almost 1 percent and Fast Retailing is edging down 0.5 percent. Among automakers, Honda is losing almost 1 percent and Toyota is down more than 1 percent.

In the tech space, Advantest and Tokyo Electron are losing almost 2 percent each, while Screen Holdings is losing almost 4 percent. In the banking sector, Mitsubishi UFJ Financial is flat and Sumitomo Mitsui Financial is edging down 0.2 percent.

The major exporters are mixed. Mitsubishi Electric and Panasonic are losing almost 1 percent each, while Canon is edging up 0.1 percent and Sony is gaining 1 percent.

Among the other major losers, Komatsu, Z Holdings and Sieko Epson are losing almost 3 percent each, while Sumco, Nissan Chemical, Nippon Steel, Showa Denko and Tosoh are down more than 2 percent each.

Conversely, ANA Holdings is gaining almost 3 percent, while Sumitomo Realty, Central Japan Railway, Isetan Mitsukoshi and Takashimaya are up almost 2 percent each.

In economic news, consumer prices in Japan were down 0.2 percent on year in March, the Ministry of Internal Affairs and Communications said on Friday – following the 0.4 percent contraction in February. This was the sixth straight month of decline. Core CPI, which excludes volatile food prices, was down 0.1 percent on year – matching expectations following the 0.4 percent decline in the previous month. On a monthly basis, overall inflation and core CPI were both up a seasonally adjusted 0.2 percent.

Separately, the manufacturing sector in Japan is continuing to expand in April, and at a faster pace, a flash estimate from Jibun bank revealed on Friday, with a manufacturing PMI score of 59.6. That’s up from 53.3 in March and it moves further above the boom-or-bust line of 50 that separates expansion from contraction. Business sentiment improved in April, marking the 11th straight month of optimism among Japanese manufacturers. Also, the services index improved to 48.3 in April from 46.5 in March and the composite index climbed to 50.2 in April from 49.9 in March.

In the currency market, the U.S. dollar is trading in the higher 107 yen-range on Friday.

On Wall Street, stocks came under pressure in afternoon trading on Thursday after turning in a lackluster performance for much of the morning. The major averages all pulled back sharply, offsetting the strong gains posted in the previous session.

The major averages climbed off their worst levels but still closed firmly in negative territory. The Dow tumbled 321.41 points or 0.9 percent to 33,815.90, the Nasdaq slumped 131.81 points or 0.9 percent to 13,818.41 and the S&P 500 slid 38.44 points or 0.9 percent to 4,134.98.

Meanwhile, the major European markets moved to the upside on the day. While the U.K.’s FTSE 100 Index climbed by 0.6 percent, the German DAX Index and the French CAC 40 Index advanced by 0.8 percent and 0.9 percent, respectively.

Crude oil futures rebounded from early losses to settle slightly higher on Thursday, gaining for the first time in three sessions as worries about the energy demand outlook weighed on oil prices early in the day. West Texas Intermediate Crude oil futures for June ended up by $0.08 or 0.1 percent at $61.43 a barrel.

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