Japanese Market Significantly Higher

The Japanese stock market is significantly higher on Wednesday, recouping some of the losses of the previous four sessions, with the benchmark Nikkei index just below the 27,600 mark, despite the broadly negative cues overnight from Wall Street, on upbeat export and import data, even as traders remain extremely concerned as the country continues to struggle to contain the rapid spread of the delta variant of the coronavirus.

The government has expanded the COVID-19 state of emergency to more areas and extended it into September to suppress the fourth wave of infections.

The benchmark Nikkei 225 Index is gaining 152.67 points or 0.56 percent to 27,577.14, after touching a high of 27,578.50 earlier. Japanese stocks closed modestly lower on Tuesday.

Market heavyweight SoftBank Group is gaining more than 1 percent, while Uniqlo operator Fast Retailing is edging down 0.1 percent. Among automakers, Honda is edging down 0.3 percent and Toyota is flat.

In the tech space, Screen Holdings is losing almost 1 percent and Tokyo Electron is declining more than 1 percent, while Advantest is gaining almost 1 percent.

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

Among the major exporters, Panasonic is edging down 0.5 percent and Mitsubishi Electric is declining almost 1 percent, while Canon is gaining almost 1 percent and Sony is adding almost 2 percent.

Among the other major gainers, Nissan Chemical is gaining almost 4 percent and Toho Zinc is adding more than 3 percent, while Nippon Suisan Kaisha, FUJIFILM Holdings, Dai Nippon Printing, Mazda Motor and Astellas Pharma are all up more than 2 percent each.

Conversely, Rakuten Group is losing more than 6 percent, while Isetan Mitsukoshi, Mitsui O.S.K. Lines and Nippon Yusen K.K. are down almost 3 percent each.

In economic news, the total value of core machine orders in Japan was down a seasonally adjusted 1.5 percent on month in June, the Cabinet Office said on Wednesday – coming in at 852.4 billion yen. That beat expectations for a decline of 2.8 percent on month following the 7.8 percent jump in May. On a yearly basis, core machine orders climbed 18.6 percent – again exceeding expectations for an increase of 15.8 percent following the 12.2 percent gain in the previous month. For the second quarter of 2021, core machine orders were up 4.6 percent on quarter and 12.6 percent on year at 2,521.0 billion yen.

Japan also posted a merchandise trade surplus of 441 billion yen in July, the Ministry of Finance said on Wednesday. That exceeded expectations for a surplus of 202.3 billion yen following the upwardly revised 384 billion yen surplus in June (originally 383.2 billion yen).

Exports were up 37.0 percent on year to 7.356 trillion yen – shy of expectations for an increase of 39 percent and down from 48.6 percent in the previous month. Imports advanced an annual 28.5 percent to 6.915 trillion yen versus expectations for a gain of 35.1 percent following the 32.7 percent spike a month earlier.

In the currency market, the U.S. dollar is trading in the mid 109 yen-range on Wednesday.

On Wall Street, stocks saw significant weakness during trading on Tuesday following the release of disappointing retail sales data. With the notable drop on the day, the Dow and the S&P 500 pulled back off Monday’s record closing highs.

The major averages climbed off their worst levels in afternoon trading, but remained firmly negative. The Dow slumped 282.12 points or 0.8 percent to 35,343.28, the Nasdaq tumbled 137.58 points or 0.9 percent to 14,656.18 and the S&P 500 slid 31.63 points or 0.7 percent to 4,448.08.

Meanwhile, the major European markets turned in a mixed performance on the day. While the U.K.’s FTSE 100 Index rose 0.4 percent, the German DAX Index closed just below the unchanged line and the French CAC 40 Index dipped 0.3 percent.

Crude oil futures settled lower Tuesday, extending losses to a fourth straight session, amid concerns about the outlook for energy demand due to a surge in cases of the Delta variant of the coronavirus. West Texas Intermediate Crude oil futures for September ended down $0.70 or 1 percent at $66.59 a barrel.

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