Japanese Market Modestly Lower

The Japanese stock market is trading modestly lower on Friday, extending the losses in the previous two sessions, with the benchmark Nikkei 225 below the 28,700 level, despite the broadly positive cues overnight from Wall Street, following domestic data that showed industrial production contracted for the third straight month. Traders are also cautious as they brace for the general elections this weekend, with recent polls providing mixed trends.

The benchmark Nikkei 225 Index is losing 133.69 points or 0.46 percent to 28,686.40, after hitting a low of 28,475.06 and a high of 28,870.91 earlier. Japanese shares closed significantly lower on Thursday.

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

In the tech space, Advantest is losing more than 3 percent, Tokyo Electron is flat and Screen Holdings is up more than 1 percent.

In the banking sector, Mitsubishi UFJ Financial is losing more than 1 percent, Sumitomo Mitsui Financial is down almost 1 percent and Mizuho Financial is declining almost 1 percent.

Among major exporters, Panasonic is slipping more than 5 percent, Mitsubishi Electric is declining almost 3 percent and Canon is losing almost 1 percent, while Sony is gaining more than 1 percent.

Among the other major gainers, Hino Motors is losing almost 7 percent, while Chubu Electric Power and Alps Alpine is down more than 6 percent each. CyberAgent is declining almost 5 percent and JGC Holdings is lower by more than 4 percent, while Osaka Gas and Isuzu Motors are shedding more than 3 percent each.

Conversely, Fuji Electric is soaring more than 9 percent and Keyence is gaining more than 3 percent.

In economic news, overall inflation in the Tokyo region of Japan was up 0.1 percent on year in October, the Ministry of Internal Affairs and Communications said on Friday. That was in line with forecasts and down from 0.3 percent in September. Core CPI, which excludes volatile food prices, also rose just 0.1 percent on year – unchanged from the previous month but shy of expectations for 0.3 percent. On a seasonally adjusted monthly basis, overall inflation was down 0.4 percent and core CPI slipped 0.2 percent.

Further, the unemployment rate in Japan came in at a seasonally adjusted 2.8 percent in September, the Ministry of Internal Affairs and Communications said on Friday. That was in line with expectations and unchanged from the August reading. The job-to-applicant ratio was 1.16, exceeding expectations for 1.14, which would have been unchanged from the previous month. The participation rate was 62.3 percent, matching forecasts and down from 62.4 percent a month earlier.

Industrial production in Japan was down a seasonally adjusted 5.4 percent on month in September, the Ministry of Economy, Trade and Industry said on Friday. That missed expectations for a decline of 3.2 percent following the 3.6 percent contraction in August. On a yearly basis, industrial production sank 2.3 percent – again missing forecasts for an increase of 2.0 percent following the 8.8 percent gain in the previous month. Upon the release of the data, the METI’s assessment of industrial production is that it is pausing.

In the currency market, the U.S. dollar is trading in the mid 113 yen-range on Friday.

On Wall Street, stocks moved mostly higher during trading on Thursday, offsetting the pullback seen late in the previous session. With the upward move on the day, the tech-heavy Nasdaq and the S&P 500 reached new record closing highs.

The major averages saw further upside going into the close of trading. The Dow climbed 239.79 points or 0.7 percent to 35,730.48, the Nasdaq surged 212.28 points or 1.4 percent to 15,448.12 and the S&P 500 jumped 44.74 points or 1 percent to 4,596.42.

Meanwhile, the major European markets turned in a mixed performance on the day. While the French CAC 40 Index advanced by 0.8 percent, the U.K.’s FTSE 100 Index and the German DAX Index both edged down by 0.1 percent.

Crude oil futures settled marginally higher Thursday, recovering from an early setback as prices were weighed down by data showing an increase in U.S. crude inventories and the prospect of Iranian crude entering the market. West Texas Intermediate crude oil futures for December ended up by $0.15 or 0.2 percent at $82.81 a barrel.

Market Analysis