Nikkei Rallies; Trade Surplus Rises 41%

Chandrasekhar Atreya
26 Jul, 2010
New York City

Stocks in Japan rallied strongly on positive earnings outlook. Japan

[R]5:00 PM Tokyo, Japan – Stocks in Japan rallied strongly on positive earnings outlook. Japan’s trade surplus surges in June, thirteenth monthly increase in a row. Eisai gets U.S. approval for higher dose of Alzheimer treatment. Sumitomo and BHP finalize iron ore processing fee. JFE Steel agrees to take a 14% stake in India’s JSW Steel and a 24% stake in China’s Panchen Yihong Pipe Co.[/R]

Stocks in Japan rallied strongly boosted by solid U.S. corporate earnings, positive earnings outlook at home and the good news about stress results on European banks. Hopes for robust corporate results from Sony Corp, Toyota Motor Corp and a host of major banks supported the market sentiment.

However the benchmark index after breaching briefly the 25-day moving average resistance level of 9,550, fell below the trend line in the afternoon trading.

The Nikkei 225 Stock Average gained 0.77% or 72.70 to close at 9,503.66 in Tokyo. The broader Topix index added 0.6% to close at 845.88 with about three stocks advancing for each that fell.

In the Nikkei 225, 165 stocks gained, 48 stocks declined, and 12 remained unchanged.

Japan’s trade surplus in June rose 41.1% from a year earlier, thanks to a steady recovery in exports, official data showed on Monday. While exports have climbed, June was the weakest this year as demand from China and Europe waned.

The surplus reached 687 billion yen in June, making it the 13th straight month of improvement on the earlier year levels. Shipments from Japan gained 27.7% in June from a year earlier, according to the Ministry of Finance.

Japan’s Finance Ministry aims to revise a program designed to help developing nations to advance economically by applying preferential tariff on their products with the goal of making it available to more nations and products.

Eisai & Co gained after receiving the U.S. regulatory approval to sell a higher dosage version of its best selling Alzheimer drug Aricept. The Food and Drug Administration on July 23 approved the 23-milligram once-daily Aricept tablet for Alzheimer.

Aricept generated about $3.7 billion for Eisai in the last fiscal year, 60% of which came from the United States, the world’s largest drug market. New forms of the treatment including the higher dose product will help the company maintain its sales in the U.S. at half the current levels after patent protection expires in November, said Eisai in March.

The government in Japan is seeking a 10% cut in budget requirements of the various ministries, said Minister for Civil Service Reform, Koichiro Genba, while addressing reporters in Tokyo today. He said the government also plans to set aside more than 1 trillion yen to promote economic growth.

Sumitomo Metal Mining Co and BHP Billiton have agreed on the processing fee to convert iron ore into refined metal, a Sumitomo official said. The fees are negotiated and settled twice a year.

“We have concluded a deal with BHP for the processing contract that starts July 1,” said Masashi Takahashi, a spokesman of Sumitomo said by phone today. He did not however disclose the details of the agreement.

JFE Steel of Japan finalized an agreement to obtain roughly 14% of Indian steelmaker JSW Steel Ltd’s outstanding shares for around Rs 4000 crore.

Japan’s second-biggest steelmaker JEE Holdings Inc finalized an agreement to invest around $1 billion in India’s JSW Steel Ltd, by buying securities convertible into shares at a minimum price of Rs 1,300 each, says reports.

The steel unit of Japan’s JFE Holdings Inc, also said it agreed to buy a 24% stake in a steel pipe making company in China to expand its presence in that country.

Panchen Yihong Pipe Co, a joint venture between PanGang Group Chengdu Steel & Vanadium Co and Marubeni-Itochu Steel Inc, will become an affiliate of JFE Steel, the Tokyo-based company said in a statement.

Gainers & Losers

Clarion Co Ltd led the gainers with a rise of 7.23% to 178 yen, followed by Inpex Corp 4.88% to 430,000 yen and Nippon Soda Co 4.22% to 321 yen.

Suzuki Motor Co led the decliners with a fall of 3.18% to 1,764 yen followed by Shinsei Bank 3.03% to 64 yen and NKSJ Holdings Inc 2.65% to 515 yen.