Nikkei Rallies 1.6%; More Stimulus in Japan

Chandrasekhar Atreya
10 Sep, 2010
New York City

Stocks in Japan gained aided by a weaker yen to post the second weekly gain in a row. Government announced a 915 billion yen stimulus. Office vacancy rises in August but machine tool orders surged 170% in the month.

[R]5:00 PM Tokyo, Japan – Stocks in Japan gained aided by a weaker yen to post the second weekly gain in a row. Government announced a 915 billion yen stimulus. Office vacancy rises in August but machine tool orders surged 170% in the month.[/R]

Tokyo stocks surged Friday morning aided by a weaker yen and the rise in export sensitive stocks. The index edged lower in the after but still closed up sharply. For the week the two popular indexes traded higher.

The Nikkei 225 Stock Average gained 1.55% or 140.78 to close at 9,239.17. The broader Topix added 0.8% to 833.72. For the week the Nikkei gained 1.4% and the Topix added 1.2%.

Of the 225 stocks in the Nikkei Average, 178 traded up, 35 closed down and 12 stayed were unchanged.

Japan’s economy expanded by a price-adjusted 0.4% in the quarter to June from the previous quarter, up from the preliminary reading of a 0.1% expansion announced August 16, the Cabinet Officer reported today.

Real GDP grew at an annualized 1.5%, whereas nominal GDP decreased 0.6%.

The Cabinet approved Friday morning new measures to tackle the rising yen and deflation. In order to achieve lasting economic growth and stable employment, the government will use reserve funds to fight the rising yen and falling prices, swiftly respond to problems in the economy and employment by drawing up supplementary budgets, the Cabinet said.

The Japanese government Friday unveiled a 915 billion yen stimulus package aimed at helping the export-driven economy by properly dealing with a rising yen and domestic deflation.

The wide ranging program includes incentives and regulatory reforms to help add employment, consumer spending and corporate investment at home. The government plans to spend about 450 billion yen to extend its subsidy programs and other measures to promote sales of environmentally friendly housing and consumer electronics.

The office vacancy rate in central Tokyo rose 0.07 of a percentage point on the month to a record 9.17% at the end of August, the first increase in two months, Miki Shoji said Thursday.

The worst-ever result was affected by a cancellation of contracts at existing buildings. Large office buildings recently completed have rooms remaining vacant as firms are reluctant to lease space at these new buildings.

Japan’s Foreign Minister Katsuya Okada said Thursday that Japan and India have broadly agreed to form a bilateral free trade deal, Kyodo News reported.

The agreement reached during sub-Cabinet level talks in Tokyo, comes ahead of the planned visit of Indian Prime Minister Manmohan Singh to Japan in late October when the agreement is finalized.

Machine tool orders rose 170% to 85.84 billion yen in August from a year earlier, the ninth such month of consecutive expansion, the Japan Tool Builders’ Association said in a preliminary report released Thursday.

Domestic demand surged 120% to 28.58 billion yen also rising for the ninth month in a row and external demand tripled to 57.26 billion yen, up for the tenth month.

Incubator Bank of Japan plans to file for bankruptcy protection Friday. The former chairman was charged in August for impeding a financial regulator’s investigation.

The government will insure the bank’s customers’ deposits up to 10 million yen plus interest, Financial Services Minister Shozaburo Jimi said in a statement today.

Gainers & Losers

Canon Inc led the gainers in the Nikkei with a rally of 5.63% to 3,750 yen followed by Fast Retailing 5.55% to 11,790 yen and Sumitomo Heavy 4.98% to 443 yen.

Shinsei Bank led the decliners in the index with a fall of 4.55% to 63 yen followed by Shizuoka Bank 2.75% to 744 yen and Clarion Co Ltd 2.6% to 150 yen.