Tokyo Stocks Rise On Japan’s Strong GDP Data

May 20, 2019 – Tokyo stocks rose today as Japan’s economic growth in the first quarter beat market expectations, but the gains were limited as the data also reflected weak domestic demand amid ongoing U.S.-China trade tensions.

The 225-issue Nikkei Stock Average ended up 51.64 points, or 0.24 percent, from Friday at 21,301.73. The broader Topix index of all First Section issues on the Tokyo Stock Exchange finished 0.67 point, or 0.04 percent, higher at 1,554.92.

Gainers were led by real estate, farm and fishery, and land transportation issues.

The Nikkei briefly extended its gains to more than 100 points as government data showed that Japan’s economy grew at an annualized rate of 2.1 percent in the January-March quarter, supporting a moderate recovery of the Japanese economy.

“It came as a surprise as the market originally projected a contraction,” said Akira Tanoue, a senior strategist of the investment research department at Nomura Securities Co.

But the gains were gradually trimmed and shares remained top-heavy in the afternoon as market players digested the GDP report, in which the surprise expansion was mostly pushed up by net exports — exports minus imports — reflecting weak domestic demand, brokers said.

Shares were sold as investors realized some of the key components, such as private consumption, were weak, said Masahiro Ichikawa, senior strategist at Sumitomo Mitsui DS Asset Management Co.

Investors remained cautious about the prolonged U.S.-China trade war, the brokers said.

On the First Section, declining issues outnumbered advancers 1,203 to 855, while 82 ended unchanged.

The January-March GDP data showed private residential investment climbed 1.1 percent, helping lift real estate issues.

Mitsui Fudosan advanced 57 yen, or 2.2 percent, to 2,640 yen and Mitsubishi Estate climbed 44.50 yen, or 2.2 percent, to 2,112.00 yen.

Technology issues and companies with heavy exposure to the Chinese market were hit by the continuing trade tensions between the world’s largest two economies.

Electronics and semiconductor maker Tokyo Electron sank 510 yen, or 3.1 percent, to 15,715 yen and Industrial robot manufacturer Yaskawa Electric dived 205 yen, or 5.7 percent, at 3,380 yen.

Trading volume on the main section fell to 1,178.24 million shares from Friday’s 1,349.52 million shares.