TOKYO, May 18 (Reuters) - Japanese stocks rose in choppy trade on Wednesday morning after the market digested stronger-than-expected GDP data that initially seemed unlikely to support further stimulus or the delay of a consumption tax hike, both widely expected by the market.
The Nikkei share average rose 0.6 percent to 16,750.73 in late morning trade.
Fresh data showed Japan’s economy expanded at the fastest pace in a year in the first quarter thanks to a consumption boost from the leap year, rebounding from the previous quarter’s contraction and beating median market forecasts.
“The market’s initial reaction to the GDP data was a slight strengthening of the yen,” said Stefan Worrall, director of Japan equity sales at Credit Suisse.
“Japanese policy makers could really use a sense of crisis to help justify ramping up fiscal stimulus or pushing out the VAT (sales tax) hike and a stronger GDP figure seems to undermine that narrative, though there is also some buoyancy from stronger U.S. inflation and increased expectations for Fed rate hikes.”
The yen resumed its weakening trend in mid-morning after investors digested the GDP data and focused instead on the U.S> data.
“Taking into account the effects of the extra day from the leap year, which pushed up the quarter-on-quarter growth rate by 0.3 percentage point, growth is not as strong as the headline number shows,” said Hidenobu Tokuda, senior economist at Mizuho Research Institute.
Shares of home appliance and electronics exporter Panasonic Corp climbed 2 percent in late morning trade while tyre exporter Bridgestone Corp gained 1.1 percent.
Mitsubishi Motors Corp rose 1.7 percent after announcing company president Tetsuro Aikawa would step down over the fuel economy rigging scandal that erupted in April.
The Topix subindex for iron and steel added 0.9 percent after Japan’s steel companies shrugged off new anti-dumping duties imposed by the U.S. on Japanese and Chinese imports of cold-rolled flat steel, primarily used for automotive manufacturing, appliances and construction.
The U.S. found producers in both countries were selling the products at unfair prices but Japan’s 71.35 percent duty was significantly less than the 265.79 percent duty imposed on China.
The broader Topix climbed 0.8 percent to 1,346.50 with all but two of its 33 subindexes in positive territory.
The JPX-Nikkei Index 400 rose 0.8 percent to 12,180.44. (Reporting by Joshua Hunt; Editing by Eric Meijer)