Nikkei Falls 2.2%; Yen at 15-Year High

Chandrasekhar Atreya
08 Sep, 2010
New York City

Stocks in Japan dropped as the yen continued to rise and the Bank of Japan cited modest economic recovery. Yen traded at the high last seen since May 1995. Core machinery orders and current account surplus surged in July. Toyota recalls continue and extend to Australia.

[R]5:00 PM Tokyo, Japan – Stocks in Japan dropped as the yen continued to rise and the Bank of Japan cited modest economic recovery. Yen traded at the high last seen since May 1995. Core machinery orders and current account surplus surged in July. Toyota recalls continue and extend to Australia.[/R]

The benchmark index in Japan dropped more than 2% as the yen continued to rise and the weakness in New York trading.

The Nikkei 225 Stock Average fell 2.18% or 201.4 to close at 9,024.60. The broader Topix lost 1.7% to close at 820.99 with 32 out of the 33 industry groups tracked in the index closing lower.

Of the 225 names in the Nikkei index, 210 dropped, 8 were unchanged and 7 gained.

The yen briefly strengthened to 83.98 to the dollar Tuesday, hitting the 83 level for the first time in Tokyo since June 28, 1985. The yen gained further Wednesday afternoon briefly trading at around 83.35 to the dollar, its highest level since May 31, 1995.

The Bank of Japan said the nation’s economy shows further signs of moderate recovery in September, keeping its assessment unchanged for the fourth consecutive month since upgrading it in May.

In its monthly economic report released Wednesday, the central bank used a weaker tone on the nation’s economic outlook, stating that Japan’s economy is likely to recover at a moderate pace, although the pace is likely to slow temporarily.

Core machinery orders rose 8.8% in July from a year earlier to 766.3 billion yen, marking it the second straight month of increase, the Cabinet Office reported Wednesday. The data was better than the 1.8% growth projected by market analysts in a Nikkei Quick News survey.

Machinery orders from manufacturers increased by 10.1%, while those from non-manufacturers rose by 8.1%.

The current account surplus rose 26.1% year-on-year in July to 1.675 trillion yen, according to preliminary reports based on balance of payments released Wednesday by the Ministry of Finance.

The surplus was better than the 1.563 trillion yen projected by market analysts in a Nikkei Quick News survey.

The benchmark money supply measure grew 2.1% in August from a year earlier, the Bank of Japan said Wednesday. The balance of M3, currency in circulation, deposit money, quasi money and CDs, averaged 1,079.4 trillion yen. The balance of M2, currency in circulation, and deposits, excluding those held in Japan Post Bank, expanded 2.8% on the year.

Premium insurance for mandatory automobile liability insurance soared 8.6% in August from a year earlier, as consumers rushed to buy fuel-efficient vehicles before the government ends its subsidies.

Short selling of stocks accounted for 25.5% of the stock trading value in August, its highest level since August 2002, according to the Tokyo Stock Exchange data released Tuesday.

Sony Corp announced Tuesday it will sell its Barcelona, Spain factory that manufactures LCD televisions for European markets.

Sony said it will continue to receive LCD TVs from the plant on a contract basis for two years after the sale. It will then completely exit TV production in Europe and focus on its market in Japan, China, Malaysia and Brazil.

Electrolux Japan, the local arm of Swedish home appliance maker AB Electrolux, aims to bolster domestic sales of high-end appliances by expanding its product offerings, increasing its sales network, and adding more promotional ads.

Starting next month the company will advertise its appliances in women’s magazines for the first time, hoping to appeal direct to homemakers by touting the functions of these products.

McDonald’s Holding Co (Japan) said Tuesday that sales rose by 5% year-on-year to a record 51.39 billion yen in August, thus breaking the earlier record of 49.73 billion yen set in March this year.

During August, the company temporarily lowered the price of its signature Big Mac hamburger to 200 yen and also expanded 100 yen breakfast offerings.

Tokyo Electron Ltd said it will revamp production processes for semiconductor making equipment, seeking to slash order-to-delivery period by half and also reducing production costs by at least 30%.

Under the new method, an etching machine for fabricating microchips will go through an assembly line consisting of seven or so processes, shortening the delivery time to one month. Currently production takes place in one man cells designed to meet diverse specifications from customers.

Toyota Motor Corp recalled 116,507 four-wheel drive gasoline and turbo-diesel HiLux vehicles produced between January 2005 and February 2010, in Australia.

Harsh acceleration or deceleration may lead to the vehicle’s rear tailshift center bearing support brackets to give way, Toyota said in a statement Wednesday.