Nikkei Surges 2.8%; Trade Surplus Shrinks

Mayank Mehta, Chandrasekhar Atreya and Sanjay Barot
08 Jul, 2010
New York City

Japanese stocks rallied after the U.S. retail sales were ahead of expectations. Trade surplus shrinks for the first time in May and machine orders slips in the month. Toyota plans to add more quality control staff in the U.S. and Canada.

[R]5:00 PM Tokyo, Japan – Japanese stocks rallied after the U.S. retail sales were ahead of expectations. Trade surplus shrinks for the first time in May and machine orders slips in the month. Toyota plans to add more quality control staff in the U.S. and Canada[/R]

Japanese stocks rose, boosting the Nikkei by the most in a month after a trade group said U.S. retail sales grew at the fastest pace in the first five months of the year since 2006.

The Nikkei 225 Stock Average rallied 2.76% or 256.09 to close at 9,535.74, the most since June 3. Of the stocks in the index, 220 increased, 3 declined and 2 stayed unchanged. The broader Topix Index rose by 2.3% to close at 861.02 with about 10 stocks gaining for each that fell.

Japan’s current account surplus shrank for the first time in 10 months in May, hit by slower export growth and a drop in overseas income remittances, the Finance Ministry said today.

The current account surplus declined to 1.21 trillion yen, down 8.1% from a year ago. The trade surplus in Japan edged down 0.6% to 391.0 billion yen, with exports rising 33.8% against a 37.8% increase in imports.

However, Bank of Japan’s Governor Masaaki Shirakawa said the world’s second-largest economy will keep expanding driven by demand from abroad.

“Exports and production are expected to keep increasing though at a slower pace as overseas economies continue to improve. Domestic private demand will likely keep improving and the Japanese economy will likely stay on a recovery trend,” said Shirakawa at a quarterly meeting of the bank’s branch managers in Tokyo today.

Machine orders in Japan fell the most since August 2008, and orders, an indicator of future capital spending, slipped 9.1% in May from April, the Cabinet Office said in Tokyo. This was the first decline in three months which prompted Cabinet Office spokesman Keisuke Tsumura to say the economic outlook is becoming less certain.

NEC Corp, Japan’s largest personal computer maker, is aiming to double its share of the world’s supercomputer market in the next four years by increasing sales in Europe.

“The market for supercomputers will reach $14.6 billion by 2014 and NEC will increase its share to 5% of this market, as the barrier to entry in Europe is lower than in the U.S., where there’s a buy American mentality,” said Fumihiko Hisamitsu, General Manager of NEC’s high-performance computing division in an interview at the company headquarters in Tokyo on July 5.

Nikkei Movers

JX Holdings Inc led gainers in the Nikkei 225 Stock Average with a rise of 6.3% followed by Marui Group Co Ltd 6.2%, Advantest Corporation 6.0% and Sumitomo Metal Industries, Ltd 5.5% and Credit Saison Co., Ltd 5.4%.

Shionogi & Co., Ltd led the decliners in the Nikkei 225 Stock Average with a loss of 0.4% followed by Yahoo Japan Corporation 0.2%, Fast Retailing Co Ltd 0.08%, Oji Paper Co Ltd 0.46% and Astellas Pharma Inc 0.6%.

Other Movers

Canon Inc added 3.3% to 3,445.00 yen.

Mitsubishi UFJ Financial Group, Inc climbed 3.3% to 428.00 yen tracking a rally in banking sector.

Mizuho Financial Group, Inc closed unchanged at 141.00 yen after the Mizuho Corporate Bank, a subsidiary, will become the first foreign bank to participate in project financing in India according to the Nikkei Daily.

Toyota Motor Corporation advanced 2.6% to 3,130 yen after the carmaker said it will add new product quality field offices in the U.S. and Canada to speed investigations of vehicle defects after its worst recall crisis.