Consumer Confidence Rises in Japan

Mayank Mehta, Chandrasekhar Atreya and Darlington Musarurwa
18 May, 2010
New York City

Stocks in Tokyo rose after consumer confidence increase in April. Bank of Japan resumes supply of US dollars. Department store sales decline 3.7% in April and sales in the Tokyo area contracted 4.9%.

[R]5:00 AM New York, 7:00 PM – Stocks in Tokyo rose after consumer confidence increase in April. Bank of Japan resumes supply of US dollars. Department store sales decline 3.7% in April and sales in the Tokyo area contracted 4.9%.[/R]

Stocks in Tokyo trading rose 0.1% on the rise in consumer confidence in April, raising expectations that the economy is on the mend.

However stocks of most commodity-linked companies dropped after drop in metal and oil prices. The Nikkei 225 lost 9.3% from its April 5 year-high on concern of euro-zone debt crisis may spread to other nations.

The Bank of Japan said today that it has resumed supply of unlimited dollars loans for 84 days from May 20 to August 12 at 1.24% fixed interest rate against eligible collateral, thus joining the global efforts to ensure money market liquidity.

The Bank of Japan’s previous dollar supplying operations expired in January this year.

The tertiary index of Japan’s demand for services, which captures 63% of the economy, fell 3% from February, the Trade Ministry said in Tokyo today. This was in contrast to the recent data that suggested consumers are reaping the benefits of an export-fueled demand.

Shipments of coffee from Brazil may get a boost after Japan relaxed its rule on agricultural fungicide residues in green coffee imports to bring it on par with world food standards set by Codex Alimentarius Commission.

‘The government will raise its pyraclostrobin tolerance levels, to 0.3 parts per million from 0.01 ppm’, said Toshiaki Kudo, deputy manager at the standard and evaluation division of the Ministry of Health, Labor and Welfare in an interview in Tokyo.

In Tokyo trading Nikkei 225 Stock Average increased 0.1% or 6.88 to 10,242.64 and the broader Topix Index declined 0.7% to 913.91.

In the first section of the Topix Index 23.1 billion shares worth 1.6 trillion yen were traded and on the second section 485 million shares valued at 4.8 billion yen changed hands.

Of the Nikkei 225 index stocks, 70 rose, 141 fell, and 14 were unchanged. Hokuetsu Kishup led gainers in the index shares with a rise of 5.3%.

Consumer Confidence Rises in April

Japan’s Cabinet Office reported today that the country’s consumer confidence index rose to 42 in April from 40.9 the previous month.

A reading above 50 shows expansion, while a measure below 50 shows contraction.

Overall livelihood climbed to 42.4 from 41.2 a month earlier, while income growth edged up 40.4 from 39.5 a month ago and employment gained 38.3 from 35.9.

The willingness to buy durable goods rose to 47 from 46.8.

BOJ Receives $210 million in Bids

Bank of Japan today began its dollar-supply market operation and received bids worth $210 million.

Demand was however relatively weak.

Department Store Sales Fall 3.7% in April

Japanese Department Stores Association reported today that department store sales declined 3.7% to 484.6 billion yen in April, dropping for the 26th month in a row.

Sales in the Tokyo area contracted 4.9% to 121.9 billion yen.

Nikkei 225 Stock Average Movers

Hokuetsu Kishup led gainers in the Nikkei 225 index stocks with a rise of 5.3% followed by Maruha Nichiro 4.5%, Nishin Chemical Industries 4.1%, Mitsui Electric Co. 2.7%, and Secom Co. Ltd 2.4%.

Nippon Yusen led decliners in the Nikkei 225 index stocks with a fall of 8.1% followed by Mitsui Mining & Smelting 5.5%, Clarion Co. Ltd. 5%, Mitsubishi Chemical 4.7%, and Kawasaki Kisen 4.4%.

Other Movers

Shipping lines dropped after the Baltic Dry Index, which measures shipping costs for bulk commodities, decreased 0.2% yesterday. Mitsui OSK Lines fell 3.8% to 631 yen.

Energy stocks declined after crude oil prices slipped 2.1% to $70.08 per barrel. Inpex plunged 2.5% to 587,000 yen.

Fanuc Ltd. jumped 1.6% to 9,850 yen after the broker lifted its price estimate 27% to 14,000 yen.

All Nippon contracted 2.2% to 271 yen on news the firm will change its corporate charter to increase the maximum number of allowable shares.