Japanese Market Significantly Higher

The Japanese stock market is significantly higher on Friday, extending the strong gains of the previous session, with the benchmark Nikkei 225 above the 28,300 level, following broadly positive cues overnight from Wall Street on upbeat weekly labor market data.

Meanwhile, continuing concerns about the spike in daily domestic coronavirus infections and possible more restrictions and lockdowns are limiting the market’s upside. The Japanese government is expected to add Okinawa to the areas under a COVID-19 state of emergency as infections are surging in the southern island prefecture.

The benchmark Nikkei 225 Index is gaining 119.99 points or 0.43 percent to 28,218.24, after touching a high of 28,411.56 earlier. Japanese shares closed slightly higher on Thursday.

Market heavyweight SoftBank Group is gaining almost 1 percent and Uniqlo operator Fast Retailing is adding more than 1 percent. Among automakers, Honda is gaining more than 1 percent and Toyota is adding almost 1 percent.

In the tech space, Advantest is flat, Tokyo Electron is adding more than 1 percent and Screen Holdings is gaining almost 2 percent. In the banking sector, Mitsubishi UFJ Financial is losing almost 2 percent, Mizuho Financial is down almost 1 percent and Sumitomo Mitsui Financial is edging down 0.5 percent.

The major exporters are mixed. Canon and Sony are gaining almost 1 percent each, while Panasonic is losing almost 1 percent. Mitsubishi Electric is edging up 0.2 percent.

Among the other major gainers, Toppan printing is gaining more than 4 percent, CyberAgent is adding almost 4 percent and Recruit Holdings is up more than 3 percent. Olympus, Nexon, Toyota Tsusho and Suzuki Motor are gaining almost 3 percent.

Conversely, Showa Denko, Dowa Holdings and Inpex are losing more than 2 percent each, while T&D Holdings, Pacific Metals, Nippon Light Metal, West Japan Railway and Tokio Marine are down almost 2 percent.

In economic news, Japan fell further into deflation as overall consumer prices were down 0.4 percent on year, the Ministry of Internal Affairs and communications said on Friday – after slipping 0.2 percent in March. Core CPI, which excludes volatile food prices, was steady at -0.1 percent on year. On a seasonally adjusted monthly basis, overall inflation fell 0.4 percent and core CPI sank 0.5 percent.

Separately, the latest survey from Markit Economics revealed that the manufacturing sector in Japan continued to expand in May, albeit at a slower pace with a survey record manufacturing PMI score of 52.5. That’s down from 53.6 in April, although it remains above the boom-or-bust line of 50 that separates expansion from contraction. The survey also showed that the services PMI eased to 45.7 from 48.3 in April and the composite fell to 48.1 from 51.0.

In the currency market, the U.S. dollar is trading in the higher 108 yen-range on Friday.

On Wall Street, stocks snapped a three-day losing streak and closed higher on Thursday, buoyed by data showing a drop in jobless claims last week. Technology stocks posted strong gains, contributing significantly to market’s strong close. Bitcoin’s rebound after a terrible setback in the previous session aided sentiment. A few encouraging earnings announcements helped as well.

The major averages all closed notably higher. The Dow came off day’s high of 34,233.40, but still closed with a fairly decent gain of 188.11 points or 0.55 percent at 34,084.15. The S&P 500 ended up by 43.44 points or 1.06 percent at 4,159.12, while the Nasdaq settled at 13,535.74, gaining 236 points or 1.77 percent.

The major European markets also closed on a strong note, rebounding well after a sell-off in the previous session. While the U.K.’s FTSE 100 climbed 1 percent, Germany’s DAX surged up 1.7 percent and France’s CAC 40 advanced 1.29 percent.

Crude oil prices fell sharply Thursday, extending losses to a third straight day as signs of progress in Iran nuclear talks raised expectations that global crude supply will see a surge in the near term. West Texas Intermediate Crude oil futures for June ended down by $1.31 or 2.1 percent at $62.05 a barrel on the expiration day.

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