Japanese Market Notably Higher

The Japanese stock market is notably higher on Tuesday, extending the gains in the previous two sessions, with the benchmark Nikkei index staying below the 27,200 level, following the broadly positive cues from Wall Street overnight, with technology firms leading the gains. Traders are also relived after Prime Minister Fumio Kishida said he is not yet considering declaring a state of emergency for Tokyo.

However, concerns over the continued spike in domestic Covid-19 cases is limiting the upside, with Japan topping 70,000 daily new cases for the sixth straight day and hitting record highs each day in the last two weeks. Tokyo and 33 of the 47 prefectures have been placed under a quasi-state of emergency last week.

The benchmark Nikkei 225 Index is gaining 183.93 points or 0.68 percent to 27,185.91, after touching a high of 27,410.79 earlier. Japanese shares closed sharply higher on Monday.

Market heavyweight SoftBank Group is gaining almost 1 percent, while Uniqlo operator Fast Retailing is losing more than 2 percent. Among automakers, Honda is losing more than 1 percent and Toyota is edging down 0.5 percent.

In the tech space, Advantest is gaining more than 1 percent and Tokyo Electron is adding almost 1 percent, while Screen Holdings is losing 1.5 percent. In the banking sector, Mitsubishi UFJ Financial, Mizuho Financial and Sumitomo Mitsui Financial are gaining almost 1 percent each.

The major exporters are higher. Panasonic and Canon are adding almost 1 percent each, while Mitsubishi Electric is gaining 1.5 percent and Sony is up more than 1 percent.

Among the other major gainers, Pacific Metals is soaring more than 13 percent, TDK is surging almost 13 percent, NEC is skyrocketing more than 11 percent, Shionogi & Co. is rising almost 9 percent, Tokyo Electric Power is gaining almost 7 percent, Mitsui O.S.K. Lines is adding more than 5 percent and East Japan Railway is up almost 5 percent, while Nippon Yusen K.K., Taiyo Yuden, CyberAgent, Seven & I Holdings and Nexon are adding more than 4 percent each.

Conversely, NSK is plunging more than 10 percent, Toray Industries is losing 8.5 percent, NTN is declining 6.5 percent and Mitsubishi Motors is down more than 5 percent, while NGK Insulators, Sumitomo Dainippon Pharma and Shizuoka Bank are down almost 5 percent each.

In economic news, the manufacturing sector in Japan continued to expand in January, and at a faster pace, the latest survey from Jibun Bank showed on Tuesday with a manufacturing PMI score of 55.4. That’s up from 54.3 in December, and it moves further above the boom-or-bust line of 50 that separates expansion from contraction.

The unemployment rate in Japan came in at a seasonally adjusted 2.7 percent in December, the Ministry of Internal Affairs and Communications said on Tuesday. That was shy of expectations for 2.8 percent, which would have been unchanged from the November reading. The participation rate slipped to 61.9 percent, easing from 62.0 percent in November.

In the currency market, the U.S. dollar is trading in the lower 115 yen-range on Tuesday.

On Wall Street, stocks moved sharply higher over the course of the trading day on Monday, extending the rally seen in the previous session. Tech stocks helped lead the continued advance on Wall Street, resulting in a particularly strong gain by the tech-heavy Nasdaq.

The major averages all posted notable gains, although the Nasdaq still outperformed its counterparts. While the Nasdaq soared 469.31 points or 3.4 percent to 14,239.88, the Dow jumped 406.39 points or 1.2 percent to 35,131.86 and the S&P 500 surged 83.70 points or 1.9 percent to 4,515.55.

The major European markets also mostly moved to the upside on the day. While the U.K.’s FTSE 100 Index closed marginally lower, the French CAC 40 Index rose by 0.5 percent and the German DAX Index shot up by 1 percent.

Crude oil prices moved up sharply on Monday amid possible disruptions in supply due to mounting political tensions in Europe and the Middle East. West Texas Intermediate Crude futures for March ended higher by $1.33 or about 1.5% at $88.15 a barrel. WTI futures gained over 17% in the month, the best monthly returns since February 2021.

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