Japanese Market Modestly Lower

The Japanese stock market is modestly lower on Wednesday, after two previous sessions of gains, with the benchmark Nikkei index just below the 29,400 level, following the negative cues overnight from Wall Street. The losses are capped as a steady decline in COVID-19 infections and the downgrading of the state of emergency in several areas are boosting market sentiment.

The benchmark Nikkei 225 Index is losing 68.26 points or 0.23 percent to 29,373.04, after hitting a low of 29,301.94 earlier. Japanese stocks closed notably higher on Tuesday.

Market heavyweight SoftBank Group is losing almost 1 percent and Uniqlo operator Fast Retailing is down almost 2 percent. Among automakers, Honda and Mazda are edging up 0.4 percent each, while Toyota is gaining more than 1 percent each.

In the tech space, Screen Holdings is edging down 0.4 percent, while Advantest and Tokyo Electron are losing more than 1 percent each.

In the banking sector, Sumitomo Mitsui Financial is gaining almost 1 percent, while Mitsubishi UFJ Financial and Mizuho Financial are edging up 0.3 percent each.

Among the major exporters, Panasonic is edging down 0.5 percent and Sony is losing more than 2 percent, while Mitsubishi Electric is gaining almost 1 percent and Canon is edging up 0.3 percent

Among the other major losers, GS Yuasa and Unitika are losing more than 3 percent each, while M3 is down almost 3 percent. Eisai, Konami Holdings, DeNA, Recruit Holdings and Keio are declining more than 2 percent each.

Conversely, Sapporo Holdings is gaining almost 5 percent, while AGC, Kawasaki Kisen Kaisha and CyberAgent are adding more than 4 percent each. Nippon Sheet Glass and Inpex are up almost 4 percent each, while Yokohama Rubber and Takashimaya are up more than 3 percent each. Mitsui Chemicals, Mitsui O.S.K. Lines and Nippon Yusen K.K. are adding almost 3 percent each.

In economic news, Japan posted a merchandise trade deficit of 187.1 billion yen in May, the Ministry of Finance said on Wednesday. That missed expectations for a shortfall of 91.2 billion following the downwardly revised 253.1 billion yen surplus in April (originally 255.3 billion yen). Exports skyrocketed 49.6 percent on year, missing forecasts for a jump of 51.3 percent following the 38.0 percent spike in the previous month. Imports climbed an annual 27.9 percent versus expectations for 26.6 percent and up from 12.8 percent a month earlier.

Separately, the Cabinet Office said on Wednesday that the value of core machine orders in Japan was up a seasonally adjusted 0.6 percent on month in April, coming in at 802.9 billion yen. That missed expectations for an increase of 2.7 percent and was down from 3.7 percent in March. On a yearly basis, core machine orders gained 6.5 percent – again missing expectations for 8.0 percent following the 0.2 percent contraction in the previous month. The total value of machinery orders received by 280 manufacturers operating in Japan jumped 18.2 percent on month and 19.5 percent on year in April.

In the currency market, the U.S. dollar is trading in the lower 110 yen-range on Wednesday.

On Wall Street, stocks moved to the downside during trading on Tuesday, with traders looking ahead to the Federal Reserve’s monetary policy announcement on Wednesday. The Nasdaq and the S&P 500 pulled back after ending the previous session at new record closing highs.

The major averages all closed in negative territory, although the tech-heavy Nasdaq underperformed its counterparts. While the Nasdaq slid 101.29 points or 0.7 percent to 14,072.86, the Dow fell 94.42 points or 0.3 percent to 34,299.33 and the S&P 500 dipped 8.56 points or 0.2 percent to 4,246.59.

Meanwhile, the major European markets have all moved to the upside on the day. The U.K.’s FTSE 100 Index, the German DAX Index and the French CAC 40 Index all finished the session up by 0.4 percent.

Crude oil prices rose sharply on Tuesday, with traders betting on hopes that demand for oil will see a significant increase in the second half of this year amid signs of a strong economic rebound from the pandemic. West Texas Intermediate Crude oil futures for July ended up $1.24 or 1.8 percent at $72.12 a barrel, the highest settlement in more than years.

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