Japanese Market Sharply Higher

The Japanese stock market is sharply higher on Monday, recouping the slight losses in the previous session, with the Nikkei 225 moving above the 32,600 level toward fresh 33-year highs, following the broadly positive cues from global markets on Friday, boosted by gains across most sectors, led by exporters and technology stocks.

The benchmark Nikkei 225 Index is up 494.24 or 1.49 percent at 33,683.28, after touching a high of 33,738.30 earlier. Japanese shares ended slightly lower on Friday.

Market heavyweight SoftBank Group is edging down 0.1 percent, while Uniqlo operator Fast Retailing is edging up 0.2 percent. Among automakers, Honda is gaining almost 2 percent and Toyota is adding almost 1 percent.

In the tech space, Screen Holdings is gaining more than 2 percent, while Tokyo Electron and Advantest are advancing almost 4 percent each.

In the banking sector, Sumitomo Mitsui Financial is gaining almost 1 percent, Mitsubishi UFJ Financial is adding more than 1 percent and Mizuho Financial is edging up 0.3 percent.

The major exporters are mostly higher. Canon is gaining more than 1 percent, Sony is advancing more than 3 percent, Panasonic is adding almost 2 percent and Mitsubishi Electric is up almost 1 percent.

Among other major gainers, Daikin Industries is surging more than 6 percent, Z Holdings is gaining almost 6 percent and IHI is adding more than 4 percent, while Kawasaki Heavy Industries, Sharp, Tokai Carbon and Ebara are advancing almost 4 percent each. Taiyo Yuden, Kawasaki Kisen Kaisha and Mitsubishi Motors are up more than 3 percent each, while Shin-Etsu Chemical and TDK are advancing almost 3 percent each.

Conversely, there are no other major losers.

In economic news, the manufacturing sector in Japan slipped into contraction territory in June, the latest survey from Jibun Bank revealed on Monday with a manufacturing PMI score of 49.8. That’s down from 50.6 in May and it falls beneath the boom-or-bust line of 50 that separates expansion from contraction.

Meanwhile, the Bank of Japan’s quarterly Tankan Survey of business sentiment showed on Monday that large manufacturing in Japan strengthened in the second quarter of 2023, with a diffusion index score of +5. That beat forecasts for a reading of +3 and was up from +1 three months ago. The outlook came in at +9, exceeding expectations for +5 and up from +3 in the previous quarter.

Large all industry capex is now seen higher by 13.4 percent, blowing away forecast for 4.9 percent and up from 3.2 percent in the previous three months.

The large non-manufacturers index came in at +23, beating forecasts for +22 and up from +20. The outlook was +20, missing forecasts for +21 and up from +15 three months earlier.

The small manufacturing index was at -5, while the small non-manufacturing index was at +11.

In the currency market, the U.S. dollar is trading in the mid-144 yen-range on Monday.

On Wall Street, stocks moved sharply higher during trading on Friday, adding to the gains posted in Thursday’s session. The major averages all moved to the upside on the day, with the tech-heavy Nasdaq leading the advance.

The major averages pulled back off their best levels going into the close but held on to strong gains. The Nasdaq surged 196.59 points or 1.5 percent to 13,787.92, the S&P 500 jumped 53.94 points or 1.2 percent to 4,450.38 and the Dow climbed 285.18 points or 0.8 percent to 34,407.60.

The major European markets also showed strong moves to the upside on the day. While the U.K.’s FTSE 100 Index advanced by 0.8 percent, the French CAC 40 Index jumped by 1.2 percent and the German DAX Index surged by 1.3 percent.

Crude oil prices climbed higher Friday, extending recent gains, as a drop in U.S. crude inventories continued to support the commodity. West Texas Intermediate Crude oil futures for August ended higher by $0.78 or 1.1 percent at $70.64 a barrel. However, WTI Crude futures shed about 12 percent in the first half and more than 6 percent in the second quarter.

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