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There is little dispute that a solid pickup in U.S. consumer spending has bolstered evidence that the economic recovery is gaining momentum.

Although capital spending is refusing to turn higher, the U.S. economy expanded at an annual pace of 5.8 percent in the first quarter.

Against this backdrop, New York stock prices have rebounded strongly, lifting the Dow Jones industrial average back above the 10,200 level.

Although further volatility may be inevitable, something of a floor beneath the New York market should soon be envisaged.

In Japan, investors are elated at a pickup in the flow of money from pension funds, along with companies’ stepped-up purchases of their own shares to narrow their float on the market.

Tightened controls on short sales have helped to shore up share prices.

There are signs that foreign investors are once again gearing up for increased purchases of Japanese equities.

An economic daily has forecast a strong rebound in corporate earnings for the current business year.

If this prediction holds water, the listed companies, excluding financial institutions, will chalk up a 56 percent year-on-year increase in their average pretax profits, marking a turnaround from the 45 percent fall logged the previous year.

Some analysts are recommending long-neglected chemical, steel, nonferrous metal and other cyclical issues sensitive to fluctuations in domestic demand.

This recommendation is, however, open to question.

In my view, the market could soon reaffirm its confidence in the high-technology sector.

Emerging as a focal point is the review of Japan’s credit rating by Moody’s Investors Service Inc.

In its report due out May 31, the U.S. credit rating agency is now widely expected to cut Japan’s sovereign rating by two notches to A2.

A narrower cut will no doubt help bolster investor sentiment.

It is encouraging to note that the 100-day moving average of the benchmark Nikkei stock average overtook its 200-day moving average for the first time in three years Monday.

Experience shows that the so-called golden cross on the chart often presages a long-sustained rally.

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