Nikkei Plunges 3.8%; Edano Replaces Ozawa

Mayank Mehta, Chandrasekhar Atreya and Sanjay Barot
07 Jun, 2010
New York City

The Nikkei 225 Stock Average had its biggest one-day decline of 3.7% since March 2009 in the morning session. The index fell further to 3.84% at close to 9,520.80, led by commodities and reports of less than estimated job growth in the U.S.

[R]5:00 PM Tokyo, Japan – Market averages in Japan declined sharply after the U.S. reported no gains in the private sector employment. Yoshihiko Noda is to be Japan’s next finance minister. Elpida plans to build a chip plant in China. Toyota may accept 25% steel price increase.[/R]

The Nikkei 225 Stock Average had its biggest one-day decline of 3.7% since March 2009 in the morning session. The index fell further to 3.84% at close to 9,520.80, led by commodities and reports of less than estimated job growth in the U.S.

Of the stocks in Nikkei 225 Stock Average, 3 increased, 222 declined. The broader Topix lost 3.5% to 859.21 with only 41 of its 1672 stocks gaining.

The euro slipped the most against the yen since November 2001 after Hungary first said the nation’s economy is in “grave condition” and later retracted that statement as “unfortunate.”

Japan’s prime minister-elect said on June 5 that he will name today Yukio Edano as the Democratic Party of Japan’s secretary-general replacing the controversial Ichiro Ozawa.

Ozawa, the architect of DPJ’s last August election victory, quit last week along with Premier Yukio Hatoyama taking responsibility for disputes over campaign finances and relocating U.S. troops ahead of next-month’s mid-term elections. Yoshihiko Noda, 53, is expected to succeed Kan as Japan’s next finance minister.

After the talks ended on June 5, the G-20 officials issued a joint statement that promised to safeguard recovery while pledging to pursue credible and growth-friendly measures to deliver fiscal sustainability.

After a joint proposal by Europe and the United States to tax banks globally to cover the cost of bailouts was defeated, officials separately targeted deadlines of November to design new rules to raise the quality and quantity of capital held by banks. The new norms are expected to be implemented by December 2012.

Elpida Memory Inc, the computer memory chip maker, has plans to build plants in Taiwan and China to meet the booming demand for DRAM across the world.

“The company will definitely foray into China in a venture with a Taiwanese chip maker as early as 2012 and also seek support from the Chinese government,” said the company President Yukio Sakamoto, in an interview on June 4. The company is also proceeding with plans to add a second plant at its Taiwanese unit, Rexchip Electronics Corp.

Samsung Electronics Co, the world’s largest computer memory chip maker had said it would invest $8.9 billion on chips this year, almost ten times more than Elpida.

An experimental drug from Eisai & Co, called Eribulin seems to have helped patients with advanced breast cancer live longer, a study of the drug found.

Eribulin, derived from a sea sponge made the patients who took it live 13.1 months as compared to 10.7 months on a currently available treatment. This finding was released yesterday at the American Society of Clinical Oncology meeting in Chicago.

The drug needs regulatory approval for it to be marketed in the U.S.

Nikkei Movers

Hitachi Zosen Corporation led gainers in the Nikkei 225 Stock Average with a rise of 3.5% followed by Sumco Corp 2.2%, Kodi Corp 1.8% and Tokyo Gas Co Ltd 0.2%.

JX Holdings Inc led the decliners in the Nikkei 225 Stock Average with a loss of 7.6% followed by IHI Corporation 7.5%, OKUMA Corporation 7.1% and Hitachi, Ltd 7.0%.

Other Movers

Canon Inc, the camera and office equipment maker declined 5.2% to 3,675.00 yen.

Hitachi, Ltd fell 7.0% to 345.00 yen after reports that a £7.5 billion or $10.9 billion UK- train deal may be canceled as Britain''s new government tries to cut down on spending, according to a Reuters report.

Honda Motor Co Ltd fell 4.5% to 2,696.00 yen and JX Holdings Inc, the refiner, fell 7.6% to 468.00 yen.

Mitsubishi Corporation fell 5.3% to 1,864.00 yen.

Toyota Motor Corporation fell 4.0% to 3,210.00 yen after the company is in the final stages of talks with Nippon Steel Corp on steel sheet prices and may accept a 25% increase for the April-September period, the Nikkei business daily reported.