Japan's Nikkei average rose for a second straight day, climbing 0.6 percent on Wednesday as trading firms surged after a brokerage lifted its rating on the sector, although a firmer yen weighed on exporters like Honda Motor Co. Nissan Motor Co jumped 5 percent after the automaker said orders for its low-emission cars in Japan were up 30 percent so far in May, but T&D Holdings plunged after Nomura cut its rating on the insurance group.
First-quarter gross domestic product shrank a record 4 percent as a plunge in global demand drove Japan's export-driven economy further into recession, but the data was broadly in line with expectations and the market shrugged it off.
"GDP came in as expected and now with that piece of news out of the way, some investors felt free to buy," said Soichiro Monji, chief strategist at Daiwa SB Investments. "But they don't want to aggressively buy stocks as US housing starts data was poor and worries about a strong yen persist, which is making it hard to pick up exporter shares."
The benchmark Nikkei added 54.35 points to 9,344.64 in light trade, extending a 2.8 percent gain booked the previous day. The broader Topix rose 0.7 percent to 886.30. Monji said the Nikkei will likely move between 9,000 and 10,000 for the next two months or so, and it could even break above 10,000 albeit briefly. Trading houses powered higher after a ratings upgrade for Mitsubishi Corp, the largest trading house in Japan, and the trading firm sector.
Goldman Sachs lifted its rating on Mitsubishi to "buy" from "neutral", saying it appears to be undervalued when compared with global resource stocks such as BHP Billiton. It raised its rating for the sector to "attractive" from "neutral", saying the global economic downturn has come to a halt. Mitsubishi shares gained 5 percent to 1,744 yen, while Mitsui & Co shot up 5.9 percent to 1,176 yen and Itochu Corp advanced 3.3 percent to 668 yen.
Shipping firms such as Kawasaki Kisen advanced after the Baltic Exchange's main sea freight index, which tracks rates to ship dry commodities hit a high for 2009. Kawasaki Kisen rose 4.7 percent to 404 yen, while Mitsui O.S.K. Lines gained 2.1 percent to 633 yen. Nissan shares climbed to 549 yen after the automaker said new government tax incentives for low-emission vehicles helped orders for its cars.
T&D Holdings tumbled 15.3 percent to 2,760 yen after Nomura cut its rating on the insurance group to "reduce" from "buy" saying its share price does not yet sufficiently factor in financial market turmoil and worsening earnings. Exporters fell as the yen strengthened. Investors worry about a stronger yen as it curbs exporters' profits when they are repatriated.
The dollar dipped to trade around 95.70 yen, though it was off a two-month low of 94.55 set earlier in the week. Honda slipped 0.7 percent to 2,685 yen and Toyota Motor Corp fell 0.5 percent to 3,660 yen. Kyocera Corp shed 1.2 percent to 7,380 yen.
Among other notable stocks, shares of Nippon Sheet Glass Co dropped 9.2 percent to 268 yen after the company forecast a bigger loss this year and said it would issue convertible preferred shares. Some 2.1 billion shares changed hands on the Tokyo Stock Exchange's first section, below last week's daily average of 2.5 billion.
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