Stocks: Wednesday's review
Japanese stocks rose for the first time in three days led by carmakers after Nomura Holdings Inc. called the shares “oversold,” and Tokyo Electric Power Co. jumped on a report other utilities may be asked to share the cost of the Fukushima nuclear accident.
The Topix has lost 9.3 percent since a record earthquake and tsunami on March 11 that devastated Japan’s northeast coast and crippled a Tokyo Electric plant in Fukushima.
Honda Motor Co. and Nissan Motor Co., the Japan’s second- and third-largest automakers, rose at least 2.9 percent.
Automakers also got a boost after the Nikkei newspaper said Renesas Electronics, a supplier of chips used in cars, will restart production in June, one month ahead of schedule, at a plant damaged by the quake. The chipmaker gained 7.6 percent to 698 yen.
Tokyo Electric surged 12 percent, while Kansai Electric Power Co. and other utilities plunged.
Commodity-related companies declined after crude and metal prices plunged.
Inpex Corp. (1605), Japan’s largest energy exploration company, declined 1.6 percent to 610,000 yen.
Japan Petroleum Exploration Co. (1662), the country’s second-biggest driller, retreated 2 percent to 3,930 yen.
Mitsubishi Corp. (8058), Japan’s largest commodities trader, lost 0.4 percent to 2,241 yen. Mitsui & Co., the second-biggest, declined 1.4 percent to 1,451 yen.
European stocks gained, rebounding from their biggest drop in four weeks, as the region’s factory output rose and JPMorgan Chase & Co. (JPM) reported record profit.
Alcatel-Lucent SA jumped 7.5 percent as Morgan Stanley recommended the shares.
ARM Holdings Plc (ARM), the designer of chips that help power Apple Inc.’s iPhone, rallied 6.8 percent.
Construction and materials companies posted the biggest advance in the Stoxx 600 after Exane raised its recommendation on the shares to “outperform.” Holcim Ltd. (HOLN), Europe’s second- biggest cement maker, increased 4.4 percent to 73.95 Swiss francs, its biggest advance in 11 months. The brokerage raised its rating on the company to “neutral” from “underperform.”
European industrial production growth accelerated in February, led by demand for intermediate and capital goods, indicating that the economy is gathering strength.
Factory output in the 17-member euro area rose for a fifth straight month, increasing 0.4 percent from January, when it advanced 0.2 percent, the European Union’s statistics office in Luxembourg said today. The median of 34 economists’ estimates in a Bloomberg News survey had predicted a gain of 0.8 percent.
Lonza Group AG (LONN) sank 6.1 percent to 72.45 francs, the largest drop in 18 months, after the maker of chemicals for drug companies predicted that its first-half performance will be weaker than last year because of the strong franc and rising raw-material prices.
Stocks ended higher Wednesday, thanks to a late-afternoon turnaround following President Obama's speech unveiling his plan to cut the U.S. budget deficit by $4 trillion over 12 years.
Despite a strong open -- thanks to better-than-expected earnings and revenue from JPMorgan Chase (JPM, Fortune 500) -- stocks spent the early part of Wednesday's session in the red.
The losses came after JPMorgan CEO Jamie Dimon said that mortgage-related losses would continue for some time, and warned that investors should not expect additional dividend increases beyond the 25 cents set for this quarter. Shares of the bank slid almost 1%. JPMorgan is the first major bank to report first-quarter results.
But the market again reversed course in the afternoon after Obama laid down a series of spending and deficit targets, adding that he wants $3 in spending cuts for every $1 in additional tax revenue.
Economy: Economists are continuing to scan the latest data for the domino effect of rising prices on other areas of the economy.
Before the market opened, the government reported retail sales rose 0.4% in March. The number was slightly below forecasts. Stripping out gas, retail sales were only up 0.1% for the month.
"Clearly, higher commodity prices are factoring into higher retail sales," said Aichi Amemiya, economist with Nomura Securities.
Retail sales for the prior two months were revised significantly higher, causing Nomura to raise its daily revised estimates for first-quarter growth to 2.3%, from 2.1% before.
A separate government report showed that business inventories rose 0.5% in February, slightly below forecasts.
Companies: Shares of Tyco International (TYC) fell 0.6%, after French company Schneider Electric denied reports that it is trying to buy the Swiss manufacturing conglomerate for $30 billion.