4-Day Fall in Nikkei; Machinery Orders Rise

Chandrasekhar Atreya
11 Aug, 2010
New York City

Stocks in Japan dropped as the yen approached nearly 15-year high. Core machinery orders gained less than expected in June. Toyota and Nissan plants in South Africa face striking workers.

[R]5:00 PM Tokyo, Japan – Stocks in Japan dropped as the yen approached nearly 15-year high. Core machinery orders gained less than expected in June. Toyota and Nissan plants in South Africa face striking workers.][/R]

Nikkei Stock Average fell more than 2%, hurt by the yen’s strength against the dollar after the Federal Reserve announced a plan to stimulate the economy. Release of Cabinet Office’s worse-than-expected core machinery order data for June before the bell also added to the sentiments.

The Nikkei 225 Stock Average retreated for the fourth straight trading day and lost 2.7% or 258.2 to close at 9,292.85. The broader Topix lost 2.4% to close at 834.45 with 20 stocks declining for each that gained.

In the Nikkei 225 only 2 stocks gained while 220 declined and 3 were unchanged.

Machinery orders gained less than expected in June, a sign that companies maybe holding off on spending as the export led recovery cools in the country.

Orders, an indicator of investment in the three to six month period, gained 1.6% from May, when they dropped 9.1%, the Cabinet Office said in Tokyo today.

Profits of export-based companies are under threat from the rising yen, which is fast approaching a 15-year high against the dollar as global demand remains weak. Slower expansion in China and the U.S., Japan’s biggest markets maybe a drag on its export-led recovery.

South African automotive industry workers started a strike over pay disputes at local units of Toyota Motor Corp, Nissan Motor Co and a few others today, the National Union of Metalworkers of South Africa said.

Tokyo-based Aiful Corp said its first quarter net plunged 57% as tighter borrowing rules had an effect on loan disbursements. Net income fell to ¥2.1 billion in the quarter ended June 30, from ¥4.9 billion a year earlier, the company said today.

Dainippon Screen Manufacturing Co, the chip-equipment maker, raised its full year forecast for net income by 83%.

Shipments of beer, low malt happoshu beer and low-price third beer increased 2.1% this year to 47.16 million cases in July, the Brewers Association of Japan reported Wednesday. Shipments of third beer expanded 16.9%, while beer and happoshu shipments dropped 0.8% and 11% respectively.

A government safety examination of Toyota’s vehicles involved in crashes attributed to sudden acceleration has not yielded so far any evidence of flaws in the cars manufacture and had found driving error to be the main cause.

The Osaka Securities Exchange said Tuesday that it reprimanded Deutsche Securities for placing 16 trillion yen worth of Nikkei Stock Average futures sell orders by mistake on June 1. The brokerage firm must now present by September 10 a business improvement report including an explanation of the cause and measures aimed at preventing a recurrence.

Yield on newly issued 10-year government bonds fell to 0.995% Wednesday afternoon, slipping below the 1% for the first time since August 4. The Federal Reserve Board decided at a meeting of the Federal Open Market Committee overnight to effectively ease monetary policy by lowering long-term interest rates while bond prices are rising.

The Japanese bond market followed the U.S. bond market trend, prompting bond buying.

Gainers & Losers

Of the stocks in the Nikkei 225 Stock Average, only 2 stocks gained.

Yokogawa Electric gained 1.18% to ¥513 and All Nippon Airways gained 0.65% to ¥308.

Maruha Nichiro, Panasonic Electronics and Tokyo Gas Co Ltd were the three stocks in the index remained unchanged.

Taiheiyo Cement led the decliners with a drop of 8.06% to ¥114 followed by Toppan Printing 6.55% to ¥685, Comsys Holdings 5.99% to ¥785 and NSK Ltd 4.95% to ¥538.