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 among Asian markets, many of which suffered losses following a report in The Wall Street Journal that Federal Reserve officials have mapped out a strategy to wind down a bond-buying program.
Stocks in Hong Kong and Shanghai finished lower after China’s industrial production rose 9.3% in April from the year-ago month and retail sales during the month improved 12.8%, with growth in both data points accelerating from the rate seen in March.
“After the slowdown earlier this year, there are encouraging signs that Chinese activity is gathering momentum,” said Savanth Sebastian, an economist at CommSec in Australia.
“One key takeaway from today’s release is that there is life yet in the [Chinese] economy — it’s just not particularly healthy. We remain confident that the government can guide gross domestic product growth in above 7.5% this year. But ... we feel the risks remain firmly on the downside,” IHS Global Insight economists wrote in a report.
Hong Kong’s Hang Seng Index /zigman2/quotes/210598030/delayed HK:HSI -1.65% gave up 1.4%, while the Shanghai Composite /zigman2/quotes/206600939/delayed CN:000001 -2.15% shed 0.2% and Taiwan’s Taiex finished 0.4% lower.
Japan’s Nikkei Stock Average /zigman2/quotes/210597971/delayed JP:NIK -0.90% climbed 1.2% to finish the day’s trading at 14,782.21 — the benchmark’s highest finish since December 2007 — after having spiked 6.7% last week. The broader Topix index /zigman2/quotes/210598092/delayed JP:180460 -0.53% rose 1.8%.
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 /zigman2/quotes/210561789/realtime/sampled USDJPY -0.0214% was trading close to the ¥102 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.
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Shares of Panasonic Corp. /zigman2/quotes/201785256/delayed JP:6752 -0.07% /zigman2/quotes/202333059/composite PCRFY +0.77% soared 7.6%, and Nissan Motor Co. /zigman2/quotes/208298710/delayed JP:7201 -0.54% /zigman2/quotes/207656007/composite NSANY +1.98% jumped 4.5%, after each issued strong annual profit forecasts. (Read more on Panasonic’s and Nissan’s results.)
Nippon Steel & Sumitomo Metal Corp. /zigman2/quotes/209782682/delayed JP:5401 -1.41% /zigman2/quotes/203679980/composite NISTF -1.59% added 0.8% after it announced plans to cut costs, although the steel maker didn’t provide a profit forecast.
Sharp Corp. /zigman2/quotes/203224600/delayed JP:6753 -0.96% /zigman2/quotes/200401218/composite SHCAY -0.88% surged 12.4% 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 /zigman2/quotes/210598269/delayed DXY +0.14% recent strength, which weighed on prices of dollar-denominated commodities.