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Japanese Market Surges

The Japanese stock market is surging on Tuesday amid optimism about more stimulus measures by global central banks and governments to combat the impact of the coronavirus pandemic on the global economy. The gains also reflect active buybacks of shares of market heavyweights by pension funds.

Overnight, the U.S. Federal Reserve announced extensive new measures, including an unlimited expansion of its asset purchases, to support the U.S. economy during the coronavirus pandemic.

The benchmark Nikkei 225 Index is gaining 851.96 points or 5.04 percent to 17,739.74, after climbing to a high of 17,759.59 earlier. Japanese shares rebounded on Monday after Prime Minister Shinzo Abe hinted that the Tokyo Olympics could be postponed, but ruled out the possibility of canceling the global sporting event.

Meanwhile, market heavyweight SoftBank is climbing almost 16 percent, extending sharp gains from the previous session after the tech conglomerate said it will sell up to 4.5 trillion yen in asses to fund a share buyback of up to 2 trillion yen and reduce debt. Meanwhile, Fast Retailing is gaining more than 7 percent.

In the tech space, Tokyo Electron is climbing more than 14 percent and Advantest is higher by more than 4 percent.

In the oil sector, Inpex is jumping more than 9 percent and Japan Petroleum is gaining 7 percent after crude oil prices rose more than 3 percent overnight.

The major exporters are higher on a weaker yen. Canon is rising almost 3 percent, Panasonic is higher by 2 percent, Sony is advancing more than 1 percent and Mitsubishi Electric is up almost 1 percent.

Among the other major gainers, Comsys Holdings is rising more than 5 percent, Shimizu Corp. and Daiwa House Industry are higher by more than 4 percent each. Haseko Corp. is adding almost 4 percent.

On the flip side, Odakyu Electric Railway is losing more than 5 percent and Oji Holdings is lower by almost 5 percent. Keio Corp., Tobu Railway, Toppan Printing, and Tokyo Gas are declining more than 3 percent each.

On the economic front, the latest survey from Nikkei revealed that the manufacturing sector in Japan continued to contract, and at a faster pace, with a preliminary manufacturing PMI score of 44.8. That's down from 47.8 in February, and it moves further beneath the boom-or-bust line of 50 that separates expansion from contraction.

The services PMI from Jibun Bank was even more troubling, as it plummeted all the way down to 32.7 in March from 46.8 in February - largely reflecting the chaos wrought by the global COVID-19 pandemic. That dragged the composite PMI down to 35.8 from 47.0 a month earlier.

Japan will also see final January figures for its leading and coincident indexes as well as February numbers for supermarket and department store sales today.

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

On Wall Street, stocks closed notably lower on Monday as a massive fiscal stimulus bill once again failed to clear a procedural hurdle in the Senate. In a largely party-line vote, Senators voted 49 to 46 in favor of the procedural motion, falling short of the 60 votes needed to advance the bill. The lack of progress on Capitol Hill partly offset the positive sentiment generated by the Federal Reserve's announcement of extensive new measures, including an unlimited expansion of its asset purchases, to support the economy during the coronavirus pandemic.

While the Nasdaq fell 18.84 points or 0.3 percent to 6,860.67, the Dow plunged 582.05 points or 3 percent to 18,591.93 and the S&P 500 plummeted 67.52 points or 2.9 percent to 2,237.40.

The major European markets also moved to the downside on Monday. While the German DAX Index slumped by 2.1 percent, the French CAC 40 Index and the U.K.'s FTSE 100 Index plummeted by 3.3 percent and 3.8 percent, respectively.

Crude oil prices climbed higher on Monday, reacting positively to the Federal Reserve's announcement of extensive new measures to support the economy. WTI crude for May ended up $0.73 or about 3.2 percent at $23.36 a barrel.

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