5:00AM New York, 7:00PM Tokyo - Japan’s exports expand 4% in April but trade surplus drops 46.3%

Stocks in Japan rose after a government report showed that exports rose more than forecasted in April buoyed by shipments to emerging economies.

Market sentiment

In Tokyo trading Nikkei 225 rose 0.37% or 52.16 at 13, 978.46, and the broader Topix Index increased 0.7% or 9.58 to 1,379.67.

In the first section of the Tokyo Stock Exchange 9.8 billion shares worth 1 trillion yen were traded and in the second section 281 million shares valued at 6.9 billion yen changed hands.

Of the Nikkei 225 stocks 131 gained, 78 declined, and 16 were unchanged. Chiyoda Corp. led advancers in the index shares with a rise of 7.99% after CLSA raised its rating on the stock from “sell” to “outperform”.

Japan’s trade surplus drops 46.3% in April

Japan’s Ministry of Finance reported today in its preliminary report on April Trade Statistics published on its Web site that Japan’s trade surplus declined for the second month by 46.3% from a year earlier to 485 billion yen.

In the period under review, exports advanced for the 53rd consecutive month by 4% to 6.89 trillion yen, while imports jumped for the seventh straight month by 11.9% to 6.41 trillion yen on the continued increase in energy prices.

The trade surplus with the United States narrowed 11.5% to 577.6 billion yen after exports declined for the eighth month by 9.1% to 1.21 trillion yen as the yen gained and demand for automobiles and electronic consumer goods waned, while imports from the United States dropped 6.7% to 640 billion yen.

Also the trade surplus with the European Union fell for the first time in nine months with the exports rising at 1.3% and imports growing at 4.5%. Export growth to China spiked to 14.1% last month from 3.1% a month earlier. Total shipments to Asia climbed 7.2% after rising 1.8% in March.

IMF urges Japan to keep key rate on hold

Bloomberg news reported today that IMF deputy director and mission chief for Japan Daniel Citrin said in Tokyo that the Bank of Japan must stop raising interest rates until worries on the state of the economy subsides.

Citrin said, “Rates should be maintained at the current level until concerns about domestic growth and the external environment have diminished.”

IMF policies and recommendations were responsible for a runaway inflation in Indonesia and forced the country into a severe recession and currency devaluation in the late nineties.

Federal Reserve cut economic growth forecast

The US Federal Reserve minutes of the April 30 meeting showed that the economic growth for the current year was lowered to between 0.3% and 1.2% from the January projection of 1.3% to 2.0%.

The deliberation in the meeting suggested that the fed may not cut interest rate in the near term as risks to economic growth and inflation appear to be in balance. Additional rate cuts may be inflationary in the opinion of several members.

Gainers & Losers

Chiyoda Corp. led advancers in the Nikkei 225 index shares with a rise of 7.99% followed by increases in Fuji Electric House of 7.94%, in Mitsui Engineering & Shipbuilding of 6.15%, in Nippon Oil Corp of 5.31%, and Nippon Sheet Glass of 5.22%.