Nikkei Drops 5.5% in the Week

Mayank Mehta, Chandrasekhar Atreya and Sanjay Barot
02 Jul, 2010
New York City

Stocks in Japan closed higher but for the week declined 5.5%. The benchmark index Nikkei is hovering near 19-year low. Toyota recalled Lexus cars sold in Japan to rectify defective valve. Japanese U.S. auto sales increase lagged Korean makers in June.

[R]5:00 PM Tokyo, Japan – Stocks in Japan closed higher but for the week declined 5.5%. The benchmark index Nikkei is hovering near 19-year low. Toyota recalled Lexus cars sold in Japan to rectify defective valve. Japanese U.S. auto sales increase lagged Korean makers in June.[/R]

Stocks in Japan gyrated and rose marginally led by resource companies, reversing the nine-day losing streak of the Topix index after the Australian government resolved the resource tax issue.

The Nikkei 225 Stock Average gained 0.13% or 12.11 to close at 9,203.71 and of the stocks in the index 119 increased, 90 declined and 16 remained unchanged. The broader Topix also gained 0.3% to close at 830.98. The Nikkei 225 Stock Average fell 5.5% for the week while the broader Topix fell 4.2.

Toyota Motor Corp, the world’s largest automaker, suffered a further setback, after it recalls certain Lexus luxury car models in Japan. The company said as many as 270,000 cars worldwide may have defective valve components that can cause problems including stalling.

“The company will notify Japan’s transport ministry of the recall on July 5,” said Ririko Takeuchi, a spokeswoman for the company in Tokyo today by phone. The models involved are seven high-end Lexus models sold in Japan as well as the U.S. and one Toyota model sold only in Asia. The firm had earlier recalled some 8 million vehicles globally for defects linked to unintended acceleration.

The Kyoto-based Nintendo Co is introducing a new version of its handheld DS, equipped with three cameras, a wireless connection and a screen that displays 3D images without the use of specialized glasses, as portable game players are facing increasing competition from Apple Inc’s iPhone, iPad and iPod Touch.

Japanese carmakers had a disappointing month in June as South Korea’s largest automaker Hyundai Motor Co, led the sales gain in the United States in June even as waning consumer confidence affected demand for new cars and trucks.

Hyundai’s U.S. sales for the month of June jumped 35% from a year earlier and set a record for the month, the company’s U.S. unit said yesterday. The comparative figures for other increases included 11% for Nissan, 6.8% for Toyota, and 6.2% for Honda Motor co.

Auto sales in the U.S. rose 14% in June from a year earlier, much less than the 19% gain in May and 20% in April. Sales at General Motors Co and Ford Motor Co rose 11% and 13% respectively for June.

Sumitomo Mitsui Asset Management Co’s biggest China fund, The New China Fund, is focusing on consumer stocks in china after it feels that demand for these stocks will go up in the world’s fastest growing Asian economy.

The New China Fund, with over $800 million of assets under management, is buying small cap retailers, supermarkets, education and internet related shares, said the fund’s CEO Yoshinobu Uehara in an interview in Tokyo.

Nikkei Movers

Oki Electric Industry Company, Limited led gainers in the Nikkei 225 Stock Average with a rise of 4.1% followed by Sumitomo Osaka Cement Co., Ltd 4.1%, Maruha Nichiro Holdings Inc 3.7% and Taiheiyo Cement Corp 3.4% and Toshiba Corp 3.4%.

GS Yuasa Corporation led the decliners in the Nikkei 225 Stock Average with a loss of 3.2% followed by Advantest Corporation 2.8%, Taisei Corp of 2.7%, Shinsei Bank, Limited 2.6% and Fujikura Ltd 2.6%.

Other Movers

Canon Inc rose 1.0% to 3,260.00 yen after the yen declined and exporters in Tokyo trading closed higher.

INPEX Holdings Inc advanced 1.2% to 491,500.00 yen.

JX Holdings Inc, the oil refiner and copper producer, added 2.3% to 444.00 yen.

Mitsubishi Corporation dropped 2.3% to 1,826.00 yen.

Nomura Holdings, Inc fell 0.6% to 478.00 yen after the brokerage firm said it plans to postpone an initial public offering of regional lender Ashikaga Holdings Co. by as much as two years, according to local media reports in Japan.