Japan Stocks rises on hopes for full economic restart

Japan share market finished session higher on first trading session of the month, Monday, 01 June 2020, as investors sentiments was lifted by expectations that more coronavirus-linked business restrictions being lifted as the Japanese capital lifts restrictions on retail shops including department stores, theatres and gyms from Monday, after Japan lifted a nationwide state of emergency over the coronavirus last week. However, market gains capped due to concerns over violent anti-racism protests in the US and US-China tensions. At closing bell, the 225-issue Nikkei Stock Average advanced 0.84%, or 184.50 points, to 22,062.39. The broader Topix index of all First Section issues on the Tokyo Stock Exchange was up 0.32%, or 5.08 points, to 1,568.75.

Investor sentiment was lifted by hopes for the global economic revival, including Japan's, as more countries move to phase in more business activities. In Japan's capital, businesses such as gyms, theaters and retailers not selling daily essentials were allowed to open their doors to the public again, as Tokyo entered its second phase of easing measures amid the coronavirus pandemic

However, some investors switched out of riskier assets like stocks and into the perceived safe haven yen currency, following the break down in social order across some major U.S. cities. Protests and riots in the United States followed the viral video footage of an unarmed black man dying in police custody on a Minneapolis street last week.

Remarks by U.S. President Donald Trump on Friday about mounting tensions with China had little negative impact on the market as he did not mention any sanction plans against Beijing.

Eased business restrictions in Tokyo helped lifted the hard-hit retailer sector, with heavily weighted Nikkei component Fast Retailing, operator of the Uniqlo chain of casual clothing stores, advancing 2.2%. Cosmetics markers Shiseido and Kao, meanwhile, gained 3.5% and 2.8% respectively.

Gainers in the semiconductor sector included chipmaking gear manufacturer Tokyo Electron and test device maker Advantest Corp. Sony Corp., Hitachi and other export-oriented issues attracted purchases thanks to a weaker yen.

On the other hand, Fuji Electric Co. dropped as its operating profit fell short of market expectations in the year ended last March. Also on the negative side were Takeda Pharmaceutical Co. and Bridgestone Corp.

ECONOMIC NEWS: Japan Manufacturing Sector Continues To Contract In May- Japan manufacturing sector continued to contract in May, with a manufacturing PMI score of 38.4, the latest survey from Jibun Bank revealed on Monday. That's down from 41.9 in April, and it moves further beneath the boom-or-bust line of 50 that separates expansion from contraction. Individually, production fell at a sharper rate as COVID-19 disruption continued. New orders plummeted to an extent not seen since the global financial crisis, while supplier delivery times lengthened sharply one again.

Japan All-Industry Capex Up 4.3% On Year In Q1- Japan all-industry capital expenditures were up 4.3% on year in the first quarter of 2020, the Ministry of Finance said on Monday, coming in at 16.352 trillion yen. That follows the 3.5% annual decline in the three months prior. On a seasonally adjusted quarterly basis, overall capex was up 6.7%, while capex excluding software gained 7.2%. Sales for all industries fell 3.5% on year but gained 1.9% on quarter, while ordinary profits plummeted 32.0% on year and 11.6% on quarter. Operating profits tumbled an annual 33.9% and 9.5% on quarter.

CURRENCY: The Japanese yen rose against its U.S. counterpart, and was quoted at 107.52-53 yen on Monday compared with 107.81-91 yen in New York and 107.20-21 yen on Friday in Tokyo.

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