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Japan Indexes Extend Gains Despite Rising Political Instability and Policy Uncertainty

Akira Ito
29 Oct, 2024
Tokyo

Stock market indexes in Tokyo closed higher following gains in overnight trading in New York.

The Nikkei 225 stock average and the broader Topix advanced around 0.8%, driven by strong gains in tech and financial stocks.

Japan's market indexes advanced for the second day in a row as investors continue to reassess the implications of the recent national election.

The Liberal Democratic Party-led coalition lost its parliamentary majority, raising political instability and heightened policy uncertainty as leading parties struggle to form the next government.

The Bank of Japan is widely expected to leave its benchmark rates unchanged on Thursday, but the central bank's plan to gradually increase its interest rates may face additional political headwinds.

On the economic front, Japan's seasonally adjusted unemployment rate decreased to 2.4% in September from 2.5% in August and fell to the lowest level since January, the Ministry of Internal Affairs and Communications said on Tuesday.

The number of employed persons was 68.14 million, an increase of 270,000 from a year ago, and increased for the 26th consecutive month.

The number of unemployed declined by 90,000 from a year ago to 1.73 million and decreased for the second month in a row.

The job-to-applications ratio was unchanged from the previous month at 1.24%, and the labor force participation rate edged slightly higher to 63.5%.

Japan Stock Movers

The Nikkei 225 Stock Average increased 0.8% to 38,903.68, the broader Topix index gained 0.9% to 2,682.02, and the yen edged higher to 152.67 against the U.S. dollar.

Banks traded higher ahead of the Bank of Japan's rate decisions on Thursday.

Mitsubishi UFJ Financial increased 3% to ¥1,609.0, Sumitomo Mitsui Financial gained 2.6% to ¥3,242.0, and Mizuho Financial advanced 2.6% to ¥3,242.0.

Industrial companies also advanced in Tokyo trading following the weakness in the yen.

IHI Corp. increased 5.4% to ¥8,095.0, Nitto Denko added 2.6% to ¥2,507.0, Furukawa Electric advanced 6.2% to ¥3,718.0, but Toto Ltd. declined 13% to ¥4,303.0.

Tokuyama dropped 3.7% to ¥2,630.0 after the chemical company reported fiscal second quarter sales declined slightly but net profit advanced 51.8% from a year ago.

The company reiterated its positive sales and earnings outlook in the current fiscal year.

China Indexes Traded In Tight Range, HSBC Announced $3 Billion Stock Repurchase Plan, Sinopec Earnings Declined

Li Chen
29 Oct, 2024
Hong Kong

Market indexes in China and Hong Kong fluctuated between gains and losses amid mixed market sentiment as investors awaited details of possible fiscal measures and reviewed the latest batch of earnings.

The Hang Seng index advanced 0.4%, but the mainland-focused CSI 300 index dropped 0.7% after investors stayed on the sidelines ahead of the National People's Congress' standing committee's meeting next week.

Investors widely anticipate the approval of a higher budget deficit, paving the way for the government to issue long-term bonds worth between 2 trillion yen and 4 trillion yen.

The central government plans to disburse funds to local governments to support the completion of residential property projects and revive property market transactions after falling for four years in a row.

China's stock market indexes have soared as much as 40% over the five-week period to the first week in October after the People's Bank of China announced larger-than-expected monetary stimulus and political leaders signaled additional fiscal measures to bolster consumer confidence.

However, corporate earnings have lagged market expectations, and results are not likely to improve for at least another three quarters as the fiscal and monetary stimulus measures trickle down through various sectors of the economy.

Market indexes in Hong Kong and mainland China may face excessive volatility as euphoric investors scale down their expectations and foreign investors lose their patience with earnings growth and lackluster economic growth.

China Stock Movers

The Hang Seng index increased 0.4% to 20,678.97, and the mainland-focused CSI 300 index decreased 0.7% to 3,936.41.

Sinopec dropped 2.7% to HK $4.39 after the largest oil refiner in China said low demand and an economic slowdown knocked the third quarter's profit down by 55% to 8.03 billion yuan, or $1.1 billion.

Following Sinopec's results, CNOOC Ltd. decreased 1.9% to HK $18.36 and PetroChina fell 2.8% to HK $5.77.

WuXi AppTec rose 1.5% to HK $53.55 after the biotech company reported a 2% decline in revenue to 10.5 billion yuan, but surpassed analysts' estimates.

HSBC Holdings increased 3.4% to HK $71.40 after the UK- and Hong Kong-based bank reported rising revenue and earnings in the September quarter.

Revenue increased 5% to $17.21 billion, and net income advanced 9% to $6.13 billion.

India Movers: Ajanta Pharma, Bharti Airtel, Kfin Technologies, Restaurant Brands Asia, Suzlon Energy, Tata Technologies

Arun Goswami
29 Oct, 2024
Mumbai

Market indexes in Mumbai faced headwinds after a mixed batch of earnings, and foreign investors continued to lighten their holdings.

The Finance Ministry reiterated its annual economic growth estimate between 6.5% and 7.0%.

The Sensex index decreased by 0.3% to 79,745.42, and the Nifty index fell by 0.2% to 24,285.10.

On the Mumbai stock exchange, 33 stocks traded at their 52-week highs, and 33 stocks traded at their 52-week lows.

The yield on the 10-year Indian government bonds inched higher to 6.83%, and the Indian rupee eased to 84.07 against the U.S. dollar.

Bharti Airtel declined 1.6% to ₹1,635.80 after the company reported mixed quarterly results.

Consolidated revenue in the September quarter increased 8% to ₹41,473 crore from ₹38,506 crore, and net income decreased 12% to ₹4,153 crore from ₹4,717 crore a year ago, respectively.

Restaurant Brands Asia decreased 1.4% to ₹93.93 after the fast food company reported weak quarterly results.

Consolidated revenue in the September quarter increased 1.2% to ₹632 crore from ₹625 crore, and net loss expanded to ₹65.4 crore from ₹50.6 crore a year ago, respectively.

Tata Technologies increased 0.6% to ₹1,005.40 after the company reported a decline in revenue and earnings in the fiscal second quarter.

Consolidated revenue increased 2.2% to ₹1,296 crore from ₹1,269 crore, and net income decreased 2.9% to ₹157 crore from ₹162 crore a year ago, respectively.

Kfin Technologies dropped 0.8% to ₹962.25 after the financial service company reported a surge in revenue and earnings in the September quarter.

Consolidated revenue increased 18% to ₹280 crore from ₹238 crore, and net income rose 31% to ₹89 crore from ₹68 crore a year ago, respectively.

Suzlon Energy advanced 0.7% to ₹71.35 after the renewable energy company reported a surge in revenue and earnings in the fiscal second quarter.

Consolidated revenue rose 48% to ₹2,103.4 crore from ₹1,421.4 crore and net income jumped 96% to ₹200.6 crore from ₹102.3 crore a year ago, respectively.

Ajanta Pharma decreased 0.3% to ₹2,913.60 after the generic pharma company reported weaker-than-expected revenue and earnings in the September quarter.

Consolidated revenue increased 15% to ₹1,187 crore from ₹1.028 crore, and net income advanced 11% to ₹216 crore from ₹195 crore a year earlier, respectively.

The company also declared an interim dividend of ₹28 per share.

Earnings Optimism Keeps Wall Street Indexes Near Recent Highs

Alexander Garcia
28 Oct, 2024
New York City

Stock market indexes on Wall Street advanced after geopolitical tensions eased and investors awaited the release of earnings from leading technology companies.

Investors are hoping that tech companies will reiterate their commitment to continue elevated levels of investments in artificial intelligence infrastructure, which could provide support for the Nasdaq to advance to higher highs.

Last week, stocks faced headwinds on Wall Street as investors reviewed a flood of earnings for the second consecutive week.

About 30% of the S&P 500 companies have met or exceeded quarterly earnings expectations, setting the stage for market advance.

However, those upward moves were kept in check after bond yields jumped to a three-month high as investors scaled back expectations of additional aggressive rate cuts.

In the busy week ahead, U.S. investors are ready to review non-farm payrolls, the JOLTS job report, the third quarter GDP growth estimate, and the PCE inflation report.

Investors are also looking forward to quarterly results from five of the seven megacap tech stocks, including quarterly releases from Apple, Alphabet, Amazon, Microsoft, and Meta Platforms.

U.S. Indexes and Treasury Yields

The S&P 500 index increased 0.4% to 5,828.94, the Nasdaq Composite rose 0.5% to 18,609.79, and the Russell 2000 index advanced 1.6% to 2,244.21.

For the year so far as of Friday's closing, the S&P 500 index is up 22.5%, the Nasdaq Composite has advanced 25.4%, and the Russell 2000 index has gained 9.7%.

The yield on 2-year Treasury notes edged higher to 4.12%, 10-year Treasury notes inched down to 4.26%, and 30-year Treasury bonds inched higher to 4.52%.

WTI crude oil decreased $4.15 to $67.62 a barrel, and natural gas prices edged down 26 cents to $2.29 a thermal unit.

Gold fell by $5.61 to $2,742.02 an ounce, and silver increased by $0.06 to $33.79.

The dollar index, which weighs the US currency against a basket of foreign currencies, edged lower to 104.27.

U.S. Stock Movers

Energy stocks traded lower after Israel and Iran avoided escalating war after Israel struck Iran's military facilities and avoided oil and nuclear targets over the weekend.

ExxonMobil declined 1.6% to $116.36, Chevron decreased 2.2% to $147.47, and Marathon Oil dropped 3.3% to $25.58.

Tech stocks were in focus ahead of closely watched quarterly earnings from leading companies.

Apple increased 0.6% to $232.90, Alphabet advanced 2% to $168.56, Amazon.com Inc. gained 0.9% to $189.54, Meta Platforms jumped 1.8% to $581.30, and Microsoft inched higher 0.9% to $431.83.

Boeing declined 1.3% to $153.08 after the embattled aviation company launched an offering to raise as much as $19 billion.

The company is looking to sell 90 million shares and $5 billion of mandatory convertible securities.

The commercial plane maker and defense contractor has struggled to stem cash outflow after 33,000 workers struck in September, halting production, including popular 737 Max aircraft.

McDonald's Corp. decreased 2.7% to $299.0 after the company ruled out the outbreak of E. coli linked to the company's Quarter Pounders. The company said it plans to resume selling quarter pounders at impacted restaurants as early as this week.

European Markets On Hold Ahead of Busy Week of Earnings

European markets erased early gains in Monday's trading, and investors turned cautious in a busy week of earnings and economic releases.

Benchmark indexes in Paris, London, Milan, and Frankfurt traded around the flatline as investors looked for clues about the amount and timing of possible rate cuts by the European Central Bank.

Investors are expecting the eurozone GDP in the third quarter to expand by 0.2%, and consumer inflation in October is likely to hover near 1.8%.

Investors anticipated third-quarter GDP in France and Italy to grow by a fraction but contract by 0.3% in Germany.

Economists are anticipating unemployment in the Euro Area to stay near the record level of 6.4%.

In the U.K., the new Labour government is scheduled to announce its budget on October 30, as the finance minister plans to increase the borrowing limit to finance infrastructure investment.

Spain's Retail Sales Soar In September

In other economic news, Spain's retail sales increased 4.1% from a year ago in September, following an upwardly revised 2.4% in the prior month, according to the National Statistics Institute.

Retail sales rose at the fastest pace since March 2023, after nonfood sales advanced 4.8% from a year ago.

Europe Indexes and Yields

The DAX index increased by 0.3% to 19,529.81; the CAC-40 index rose by 0.8% to 7,556.94; and the FTSE 100 index advanced by 0.5% to 8,285.68.

The yield on 10-year German bonds edged higher to 2.27%, French bonds inched higher to 3.01%, the UK gilts edged down to 4.21%, and Italian bonds decreased to 3.49%.

The euro edged lower to $1.08; the British pound inched higher to $1.29; and the U.S. dollar strengthened to 86.62 Swiss cents.

Brent crude decreased $4.29 to $71.75 a barrel, and the Dutch TTF natural gas fell by €1.03 to €42.58 per MWh.

Crude oil prices fell as much as 5% after Israel and Iran walked away from escalating tensions and avoided a regional war.

Middle East tensions deescalated after last week Israel struck Iran's military facilities but avoided striking Iran's oil infrastructure and nuclear facilities, and Iran avoided vowing to retaliate.

Europe Stock Movers

Energy stocks traded lower after Israel and Iran avoided a possible regional war.

BP plc declined 2.1% to 396.60 pence, Shell PLC dropped 2.2% to 2,493.81 pence, and TotalEnergies SE eased 1.9% to €59.14.

Philips NV plunged 17.5% to €24.30 after the medical device and equipment company lowered its annual sales outlook, citing a deteriorating demand from hospitals and consumers in China.

KPN NV dropped 1.7% to €3.70 despite the Dutch telecom carrier reiterating its annual outlook.

Travel and leisure stocks traded higher after crude oil prices eased.

Deutsche Lufthansa AG increased 1.9% to €6.85, Air France advanced 2.3% to €9.34, and International Consolidated Airlines Group gained 0.9% to 213.50 pence.

Yen to Test Lower Lows After Voters In Japan Wipe Out Ruling Coalition's Majority

Stock market indexes in Tokyo closed higher after a day of volatile trading following a stinging defeat of the ruling coalition block.

The Nikkei 225 stock average jumped 1.8%, the broader Topix index advanced 1.5%, and the yen weakened to 153.67 against the U.S. dollar.

Japan heads for unprecedented political instability after the ruling coalition of the Liberal Democratic Party and Komeito lost their strong majority in the lower house of the parliament in Sunday's national election.

In the 465-member lower house of the parliament, a majority of 233 is needed to form the next government or pass any bill in the chamber.

The Liberal Democratic Party reduced its seat in the house to 179 from 247, and Komeito weakened its count to 24 from 32.

The Constitutional Democratic Party increased its lawmakers counts to 148, a sharp jump from 98; the Japan Innovation Party increased its tally to 48; and the Democratic Party for the People added seats to total 28 from 7.

For nearly seven decades, the Liberal Democratic Party has governed Japan, except between 2009 and 2012 and between 1993 and 1994.

The LDP was under pressure after the widespread slush fund scandal put the party in harsh light with voters.

Voters lacked enthusiasm and directed their anger at the established political order following the rising prices over the three years and stagnant wages for more than two decades.

The political upheaval is likely to add another layer of complexity as the Bank of Japan prepares to wean off Japan's economy from two decades of low interest rates.

The Bank of Japan is expected to leave its monetary policy and interest rates unchanged at the end of its policy meeting on Thursday, but the latest political outcome is likely to complicate the central bank's monetary policy plans.

Japan Stock Movers

The Nikkei 225 Stock Average closed up 1.8% to 38,605.53, and the broader Topix index edged higher 1.5% to 2,657.78.

In Monday's trading, tech stocks, banks, and industrial stocks traded volatile.

Advantest Corp. gained 4.6% to ¥8,181.0, Tokyo Electron advanced 2.8% to ¥23,860.0, Lasertec added 4.8% to ¥22,270.0, and Disco Corp. increased 5.3% to ¥39,670.0.

Mitsubishi UFJ Financial added 0.9% to ¥1,562.0, Sumitomo Mitsui Financial increased 1.8% to ¥3,160.0, and Mizuho Financial gained 1% to ¥3,115.0.

Toyota Motor Corp gained 4.2% to ¥2,707.0, Honda Motor advanced 4% to ¥1,582.0, and Nissan Motor increased 3.5% to ¥409.80.

IHI Corp. decreased 1.1% to ¥7,680.0, Panasonic Holdings rose 1.3% to ¥1,244.50, and Fanuc Corp. added 3.1% to ¥4,016.0.

China Sets Date to Propose Budgetary Measures

Stocks in China and Hong Kong lacked direction as investors awaited the release of fiscal measures early next week.

The Hang Seng index increased 0.4% and the CSI 300 index decreased 0.2% after the legislative committee of the National People's Congress scheduled a meeting next month.

The committee plans to meet between November 4 and 8 as lawmakers review government finances and increase the borrowing limit to finance additional measures to provide additional economic stimulus support.

Investors are hoping that the committee will approve at least 2 trillion yen of support to revive local government financing, among other measures, to facilitate property market transactions and bolster flailing consumer confidence.

The meeting will also review possible escalation of tariffs on China-made products exported to the U.S. after the presidential election on November 5.

Market sentiment was also dented after the decline in profits at large industrial companies fell at a faster pace in September, the National Bureau of Statistics reported Sunday.

Profits declined 27% from a year ago compared to a decline of 18% in August, amid a worsening economic environment and a weakening outlook.

For the nine-month period ending in September, profit declined 3.5% from a year ago.

Oil exploration companies declined after crude oil prices in international trading fell over 4% following the easing of tensions in the Middle East as Israel avoided wider military conflict.

China Stock Movers

The Hang Seng index increased 0.4% to 20,661.85 and the mainland-focused CSI 300 index decreased 0.2% to 3,948.17.

PetroChina declined 2% to HK $5.93, and China Petroleum and Chemical Corp fell 1.5% to HK $4.49 following the decline in crude oil prices in international trading.

Alibaba Group Holding gained 2.8% after the e-commerce company agreed to pay $433 million to settle a shareholder class action lawsuit in the U.S.

BYD increased 0.8% to HK $295.0, Li Auto rose 1.1% to HK $112.50, and Xpeng advanced 8.2% to HK $45.20.

U.S. Movers: Boeing, Energy Stocks, McDonald's, ON Semiconductor, Tech Stocks

Scott Peters
28 Oct, 2024
New York City

Energy stocks traded lower after Israel and Iran avoided escalating war after Israel struck Iran's military facilities and avoided oil and nuclear targets over the weekend.

ExxonMobil declined 1.6% to $116.36, Chevron decreased 2.2% to $147.47, and Marathon Oil dropped 3.3% to $25.58.

Tech stocks were in focus ahead of closely watched quarterly earnings from leading companies.

Apple increased 0.6% to $232.90, Alphabet advanced 2% to $168.56, Amazon.com Inc. gained 0.9% to $189.54, Meta Platforms jumped 1.8% to $581.30, and Microsoft inched higher 0.9% to $431.83.

Boeing declined 1.3% to $153.08 after the embattled aviation company launched an offering to raise as much as $19 billion.

The company is looking to sell 90 million shares and $5 billion of mandatory convertible securities.

The commercial plane maker and defense contractor has struggled to stem cash outflow after 33,000 workers struck in September, halting production, including popular 737 Max aircraft.

McDonald's Corp. decreased 2.7% to $299.0 after the company ruled out the outbreak of E. coli linked to the company's Quarter Pounders. The company said it plans to resume selling quarter pounders at impacted restaurants as early as this week.

ON Semiconductor Corp. decreased 0.4% to $70.94 despite the advanced chipmaker for automobile and industrial systems reporting higher sales and earnings in its latest quarter.

Megacap Tech Stocks In Focus Ahead of Earnings This Week, Crude Oil Drops 5%

Barry Adams
28 Oct, 2024
New York City

Stock market indexes on Wall Street traded higher after geopolitical tensions eased and investors awaited the release of earnings from leading technology companies.

Investors are hoping that tech companies will reiterate their commitment to continue elevated levels of investments in artificial intelligence infrastructure, which could provide support for the Nasdaq to advance to higher highs.

Last week, stocks faced headwinds on Wall Street as investors reviewed a flood of earnings for the second consecutive week.

About 30% of the S&P 500 companies have met or exceeded quarterly earnings expectations, setting the stage for market advance.

However, those upward moves were kept in check after bond yields jumped to a three-month high as investors scaled back expectations of additional aggressive rate cuts.

In the busy week ahead, U.S. investors are ready to review non-farm payrolls, the JOLTS job report, the third quarter GDP growth estimate, and the PCE inflation report.

Investors are also looking forward to quarterly results from five of the seven megacap tech stocks, including quarterly releases from Apple, Alphabet, Amazon, Microsoft, and Meta Platforms.

U.S. Indexes and Treasury Yields

The S&P 500 index increased 0.5% to 5,835.98, the Nasdaq Composite rose 0.7% to 18,646.14, and the Russell 2000 index decreased 0.5% to 2,207.99.

For the year so far as of Friday's closing, the S&P 500 index is up 22.5%, the Nasdaq Composite has advanced 25.4%, and the Russell 2000 index has gained 9.7%.

The yield on 2-year Treasury notes edged higher to 4.12%, 10-year Treasury notes inched down to 4.26%, and 30-year Treasury bonds inched higher to 4.52%.

WTI crude oil decreased $4.50 to $67.25 a barrel, and natural gas prices edged down 20 cents to $2.36 a thermal unit.

Gold fell by $14.96 to $2,732.92 an ounce, and silver decreased by $0.26 to $33.43.

The dollar index, which weighs the US currency against a basket of foreign currencies, edged lower to 104.20.