Retail Sales Rise in Japan; Nikkei Drops 2.6%

Mayank Mehta, Chandrasekhar Atreya and Darlington Musarurwa
28 Apr, 2010
New York City

Stocks in Japan dropped sharply after world markets declined. Rating downgrade of Greek and Portugal debt raised fears of wider contagion in the euro region. Japan Airlines accelerated route cuts and estimated loss in the year. March retail sales surged at the fastest pace in thirteen years.

[R]8:00 PM Tokyo, Japan – Stocks in Japan dropped sharply after world markets declined. Rating downgrade of Greek and Portugal debt raised fears of wider contagion in the euro region. Japan Airlines accelerated route cuts and estimated loss in the year. March retail sales surged at the fastest pace in thirteen years ahead of increase in consumption tax.[/R]

Stocks in Japan fell sharply after a rating agency downgrade of Greece and Portugal debts prompted worldwide sell-off. Market indexes in Tokyo dropped 2.6% and resource stocks and banks declined.

Japan Airlines Corporation, which was delisted from the Tokyo Stock Exchange in February, predicted it would lose money for the year ending March. The airline said it lost 46.8 billion yen in the latest quarter ending in March compared to a loss of 39 billion yen in the year ago period.

The airline undergoing a government-backed turnaround in bankruptcy will cut 15% international routes and 30% domestic flights according a statement released to reporters in Tokyo today. The earlier plan called for route cut of 31% over the next three years.

March retail sales rose 4.7% from a year earlier as higher demand for cars, machinery and clothes contributed to the gains, the Trade Ministry said today in Tokyo. This was the fastest pace in 13 years.

Wholesale sales increased 1.1% in the month from a year ago and commercial sales surged 2% in the month ahead of increase in consumption tax to 5% from 3%.

Honda Forecasts Higher Profit

Honda Motor Co estimated 27% increase in profit in the fiscal year ending in March as demand for cars recovers in the U.S.

The company reported it expects sales to rise to 9.34 trillion yen from 8.58 trillion yen in the prior year period, with net income of 340 billion yen in the period ending March.

Nippon Steel returns to profit

Japan’s largest steel maker, Nippon Steel Corp said that it returned to profit in the fourth quarter aided by exports to Asia.

Net income was 33.4 billion yen for the quarter ended March compared to a loss of 57 billion yen a year earlier. Sales rose to 1 trillion yen for the quarter.

Sumitomo Mitsui Returns to Profit

Sumitomo Mitsui Financial Group Inc, Japan’s second largest bank by market value reported profit in the year to March as the markets rebounded after the economy emerged from the current recession. The bank reported improved earnings as credit cycles improved materially for the banking sector.

The Nikkei 225 Index in Tokyo closed lower 287.87 or 2.57% to 10,924.79 and of the stocks in Nikkei 225 Stock Average, 9 increased, 215 declined and 1 was unchanged.

Nikkei Movers

East Japan Railway Company led the decliners in the Nikkei 225 Stock Average with a loss of 6.4% followed by Yahoo Japan Corporation 5.9%, Panasonic Electric Works Co., Ltd 5.1%, Fanuc Ltd 5.0% and Advantest Corporation 4.9%.

Isuzu Motors Ltd led gainers in the Nikkei 225 Stock Average with a rise of 3.0% followed by Clarion Co Ltd 1.9%, Toray Industries Inc 1.6% and IHI Corporation 1.6%.

Other Movers

Canon Inc declined 2.3% to 4,280.00 yen.

East Japan Railway Company declined 6.4% to 6,250.00 yen after the railway operator estimated full-year revenue of 2,585 billion yen, operating profit of 352 billion yen, net profit of 139 billion yen and earnings per share of 351.39 yen for the fiscal year ending March 2011.

Fanuc Ltd fell 4.8% to 11,090.00 yen. The maker of industrial robots said it expects group sales to grow 110% to 183.7 billion yen and net profit to soar 440% to 48.8 billion yen for the six months ending Sept. 30.

Mitsubishi UFJ Financial Group, Inc decreased 1.7% to 499.00 yen.

Toyota Motor Corporation fell 1.7% to 3,635.00 yen after the auto owner trust will reportedly sell $1.25 billion in asset-backed securities.

Tokyo Electric Power Co, Asia’s largest utility, is seeking a sizeable stake in Chevron Corp’s Wheatstone venture in Western Australia to have a stronger hand while negotiating price contracts, the utility’s head of fuel-procurement strategy said.

The company already has a 6.13% stake in the ConocoPhillips Darwin LNG project in northern Australia, and has an agreement to import 2 million tons of LNG annually that started in March 2006, said Daisuke Hirose, a company spokesman.

Tokyo Electric imported 19.6 million tons of LNG in the year ended March 2009, accounting for about a third of the country’s total imports of the fuel.