Nikkei Rallies 2%; Diffusion Index Drops

Chandrasekhar Atreya
06 Sep, 2010
New York City

Stocks in Japan gained more than 2% and in a 4-day rally on positive job data from the U.S. Small cars sales dominate in August as Prius made by Toyota leads domestic sales for the fifteen month in a row. Economic diffusion index falls for the first time in 2010 in August.

[R]5:00 PM Tokyo, Japan – Stocks in Japan gained more than 2% and in a 4-day rally on positive job data from the U.S. Small cars sales dominate in August as Prius made by Toyota leads domestic sales for the fifteen month in a row. Economic diffusion index falls for the first time in 2010 in August.[/R]

The benchmark index in Japan closed higher for the fourth day in a row. The index scaled higher in the morning on the rise in private sector U.S. jobs. Exporters led the advancers on the hopes that U.S. jobs market may stabilize.

Tokyo stocks widened their gains Monday on pause in yen’s rise and a positive job data from the U.S., pushing the benchmark index up 132 points in the morning. The index gained further the afternoon, for a fourth consecutive day of gain.

The Nikkei 225 Stock Average soared 2.05% or 187.19 to close at 9,301.32. The broader Topix also gained 1.8% to close at 838.71 with all 33 industries in the index gaining and as many as 12 stocks gained for every stock that fell.

Of the 225 names in the Nikkei index, 210 gained, 8 fell and 7 were unchaged.

Toyota Motor Corp’s Prius hybrid topped the domestic sales and ranked first for the fifteen month in a row to August, according to data released Monday by an industry group.

Prius sales rose 2.7%, year-on-year, to 22,263 units and since its debut in May 2009. Though the sales have increased at double digit pace since the launch, the pace of increase has slowed.

Honda Motor Co’s Fit sub-compact came in second, with sales jumping 57.8% to 17,258 units.

Sales of imported cars climbed 74.9% in August from a year earlier to 19,718 units for the tenth month in a row, according to preliminary data released by the Japan Automobile Importers Association.

Of the companies surveyed, 65.5% of Japanese companies view strong yen as unfavorable for the economy according to a survey released by Teikoku Databank Ltd, on Friday. With the yen recently hitting a 15-year high against the dollar, the research company polled 22,732 firms nationwide in late August to gather views on the trend, receiving valid responses from about 51%.

Many companies said a stronger yen could accelerate the nation’s deflation, or adversely affect exporters, which have been driving growth in Japan.

The economic diffusion index fell for the first time in eight months in August, down 0.3 point from July to 33.2 apparently brought on by the yen’s strength and the economic slowdown in Europe and U.S., Teikoku Databank said Friday.

“The Japanese economy is losing speed and there are some changes in the economy’s recovery trend. It is highly likely that the economy will pause, and a further downswing is also a concern,” the research firm said in a report.

The number of companies accepting applications in the past year for permanent positions from school graduates as “new graduates” dropped 2% on the year to 25% in August, Labor Ministry said Friday.

The survey clearly showed that it is extremely difficult for students to get jobs immediately after graduation.

Advanced Micro Devices Inc plans to launch its accelerated processing unit, which combines computing and graphics processing functions on a single chip, next year, President and Chief Executive Officer Dirk Meyer said Thursday.

The APU boasts dramatically improved performance and can reduce energy consumption and costs, Meyer said in an interview with the Nikkei.

Softbank Corp said Friday it will issue 130 billion yen in three-year bonds to individuals. This marks not only the largest offering of bonds for retail investors by any non-financial firm but also Softbank’s largest ever one-time issuance of straight bonds, including those for institutional investors.

The coupon rate is set at 1.24%, far below the 4.52% of comparable notes issued last September. Daiwa Securities Capital Markets Co will be the lead underwriter.

About 60% of Japan’s retail investors support scrapping the noon recess for trading shares on the Tokyo Stock Exchange, a poll taken by kabu.com Securities Co shows. The survey of online brokerage’s customers showed that 23% said mid-day break should be shortened.

Gainers & Losers

Meidenshaw Corp led the gainers in the Nikkei with a gain of 7.06% to 288 yen followed by Citizen Holdings 6.28% to 474 yen and Daiwa Securities Group 5.54% to 362 yen.

Sumco Corp led the decliners in the index with a drop of 3.89% to 1,409 yen followed by Central Japan Rail 0.72% to 694,000 yen and East Japan Rail 0.36% to 5,600 yen.