By V. Phani Kumar, MarketWatch
HONG KONG (MarketWatch) -- Japanese stocks on Monday jumped to
their highest level in more than five years, boosted by an improved
profit outlook and further yen weakness after the Group of Seven
major economies refrained from criticizing Tokyo's easing
policies.
The performance allowed the Japanese market to stand tall amid
broad declines in other regional markets, following a report in The
Wall Street Journal that Federal Reserve officials have mapped out
a strategy to wind down a bond-buying program.
The drop also came amid caution ahead of the release of China's
industrial-production and retail-sales data for April, due later in
the day.
"The release of statistics this afternoon covering China's
industrial production and retail sales for April has the potential
to move world equity and commodity markets. Indications of
moderating growth in China have been a key factor for markets in
recent months," said CMC Markets chief market analyst Ric
Spooner.
Japan's Nikkei Stock Average climbed 1% to 14,751.34 -- rising
to levels it hadn't seen since January 2008 -- after having spiked
6.7% last week. The broader Topix index gained 1.4%.
Hong Kong's Hang Seng Index gave up 1.1%, while the Shanghai
Composite shed 0.2% and Taiwan's Taiex dropped 0.4%.
South Korea's Kospi rose 0.1% and Australia's S&P/ASX 200
slipped 0.2% in choppy trade, with each changing direction several
times.
G-7 help send Tokyo higher
The gains in Tokyo came after leaders at a G-7 meeting offered
no criticism of Japan's monetary policies that have helped weaken
the yen sharply in recent months. On Monday, the U.S. dollar
(USDJPY) was trading close to the Yen102 level, further boosting
shares of Japanese exporters.
Hopes for strong earnings also provided a tailwind, after the
Nikkei newspaper reported over the weekend that listed
non-financial companies were on track to post a 20% growth in
pretax profits for the current financial year ending March 31,
2014.
Shares of Panasonic Corp. (PCRFY) soared 8.1%, and Nissan Motor
Co. (NSANY) jumped 5.2%, after each issued strong annual profit
forecasts. (Read more on Panasonic's and Nissan's results.)
Nippon Steel & Sumitomo Metal Corp. (NISTF) added 0.8% after
it announced plans to cut costs, although the steel maker didn't
provide a profit forecast.
Sharp Corp. (SHCAY) surged 10.4% after the Nikkei newspaper
reported it planned to downsize its European operations.
Several commodity producers skidded across the region on the
U.S. currency's (DXY) recent strength, which weighed on prices of
dollar-denominated commodities.
In addition to extending its gains above the Yen100 level, the
greenback also rose against other major currencies, with the euro
(EURUSD) dropping under the $1.30-handle, while the Australian
dollar (AUDUSD) traded close to parity.
The Journal report that the Fed may wind down its quantitative
easing -- a key tailwind behind the global markets' rally in recent
months -- also weighed on sentiment.
"Usually, the U.S. dollar would not benefit in times of
improving risk appetite, but it is finding plenty of support from
the fact that [Federal Reserve] policy is set to diverge with other
central banks, with the currency breaking key levels against major
currencies," said Crédit Agricole head of global markets research
Mitul Kotecha.
"The surge in U.S. Treasury yields is underpinning the U.S.
dollar, helped by firmer U.S. economic data, in particular on the
jobs front," Kotecha said.
Gold miners were hit after the precious metal's futures dropped
more than 2% on Friday.
In Sydney, shares of gold miners Newcrest Mining Ltd. (NCMGY)
lost 4.5%, and Perseus Mining Ltd. shed 7.7%.
Likewise, stock in Zijin Mining Group Co. (601899.SH) lost 1% in
Shanghai and 2.2% in Hong Kong.
Elsewhere in the resource sector, BHP Billiton Ltd. (BHP) was
off 1.1%, and Rio Tinto Ltd. (RIO) gave up 1.9% in Sydney.
Shares of energy producer Cnooc Ltd. (CEO) tumbled 2.7% in Hong
Kong, while PetroChina Co. (PTR) gave up 0.5% and Jiangxi Copper
Co. (JIXAY) lost 1.7% in Shanghai. Energy major Inpex Corp. (IPXHF)
tumbled 6.9% in Tokyo.
Shares of mainland Chinese banks dropped after central-bank data
released Friday showed they cut back on lending in April from
levels seen in March.
Bank of Communications Co. (BCMXY) fell 1.4%, and China
Construction Bank Corp. (CICHY) dropped 2% in Hong Kong; their
Shanghai-listed shares fell 1.1% and 0.4%, respectively.
Shares of Ping An Insurance Group Co. (PNGAY) slid 3.9% in Hong
Kong and 1.6% in Shanghai after China's securities regulator banned
its securities unit from underwriting new stock offers for three
months, citing negligence as the cause.
Casino operator Galaxy Entertainment Group Ltd. (0027.HK) rose
1.2% on reports it will replace Esprit Holdings Ltd. (ESPGY) as a
Hang Seng Index constituent next month. Esprit shares dropped
0.6%.
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