Japanese Market Recovers After Weak Start

7/30/2012 10:33 PM ET

After a weak start following a bout of profit taking, the Japanese stock market recovered some lost ground on Tuesday with stocks finding a bit of support at lower levels.

The yen's surge against the U.S. dollar and the euro, and caution ahead of the outcome of the U.S. Federal Open Market Committee meeting too contributed to the negative start in the market.

Shares from financial, shipbuilding, securities, transport and non-ferrous metals sections opened on a weak note and are still mostly trading subdued. Railway, foods, electric power and chemicals stocks are trading mixed.

The benchmark Nikkei 225 index, which declined to around 8,590 in early trades, is currently trading at 8,655, up 19.6 points or 0.2 percent from its previous close.

Among the prominent gainers in the Nikkei index, Fujikura is up nearly 9 percent, Advantest Corp (ATE: Quote) is up 5.5 percent, Kansai Electric Power is trading 5.3 percent up and NEC Corp is adding about 5 percent.

Panasonic Corp (PC: Quote) is gaining 4.8 percent after the company said it posted a net profit of over 10 billion yen in the April-June quarter.

NGK Insulators, Sharp Corp, Canon Inc, Tokyo Electric Power, Nippon Electric Glass, Toshiba Corp, Nippon Steel Corp, Pioneer Corp, Sumitomo Metal Industries, Showa Shell Sekiyu KK, Kawasaki Kisen Kaisha and Hitachi are up 1.5 to 5 percent.

Chubu Electric Power is down as much as 5.7 percent. Fanuc Corp and Mitsubishi Paper Mills are trading lower by around 4.5 percent. Aozora Bank, Sumitomo Mitsui Trust Holdings Inc, NTT Data Corp and Fukoka Financial Group Inc are down 3 to 4 percent.

Nippon Sheet Glass, Tosoh Corp, Daiichi Sankyo, Mitsui Chemicals, Japan Steel Works, Mitsubishi UFJ Financial Group (MTU: Quote), Shizuoka Bank, Toho Zinc and Secom Co are all trading lower by 1 to 3 percent.

On the economic front, the average of monthly consumption expenditures per household in Japan was up 1.6 percent on year in June, the Ministry of Internal Affairs and Communications said on Tuesday, standing at 269,810 yen. That was well shy of forecasts for an increase of 2.9 percent following the 4.0 percent surge in May.

The average of monthly income per household stood at 712,592 yen, down 3.8 percent on year. The average of consumption expenditures per household was 292,937 yen, up 2.5 percent on year.

According to another report from the same ministry, the unemployment rate in Japan came in at a seasonally adjusted 4.3 percent in June. That beat forecasts for 4.4 percent, which would have been unchanged from the previous month's reading.

The job-to-applicant ratio was 0.82, in line with expectations and up from 0.81 in May. The participation rate was 59.4 percent, down from 59.5 percent a month earlier.

In the currency market, the U.S. dollar traded in the lower 78-yen range in early deals in Tokyo. The yen is currently trading at 78.15 to the dollar.

On Wall Street, stocks ended with mild losses on Monday after a choppy ride. The market failed to gain significant momentum as traders chose to wait for some clear direction.

The Dow ended down 2.6 points, or less than 0.1 percent, at 12,073. The S&P 500 dipped less than a point to close at 1,385.3 and the Nasdaq closed down 12.3 points or 0.4 percent at 2,945.8.

Major European markets ended notably higher on Monday. While the French CAC 40 index gained 1.4 percent, the German DAX index and the U.K.'s FTSE 100 index moved up by 1.3 percent and 1.2 percent, respectively.

U.S. crude oil snapped a four-day winning streak to settle lower on Monday, on investor anxiety ahead of the European Central Bank and Federal Reserve policy meeting later this week.

Crude for September delivery dropped $0.35 or 0.4 percent to close at $89.78 a barrel on the New York Mercantile Exchange, after hitting a high of $90.95 a barrel intraday.