Nikkei Drops 2.1%, Yen Surges

Chandrasekhar Atreya
12 Oct, 2010
New York City

The yen resumed its ascent and closed at 15-year high against the dollar and record high against the euro. The benchmark index Nikkei dropped 2.1%. Household sentiment drops in September. Japan is likely to surpass China and as the largest holder of U.S. Treasuries. The two nations hold $1.66 trillion of U.S. debt.

[R]5:00 PM Tokyo, Japan – The yen resumed its ascent and closed at 15-year high against the dollar and record high against the euro. The benchmark index Nikkei dropped 2.1%. Household sentiment drops in September. Japan is likely to surpass China and as the largest holder of U.S. Treasuries. The two nations hold $1.66 trillion of U.S. debt.[/R]

The yen continued to surge against the euro and the dollar. Stocks in Tokyo trading fell sharply after the yen resumed its ascent. Exporters led the decliners in Tokyo trading after the yen closed at 81.96 to a dollar and 113.20 to a euro.

The Nikkei 225 Stock Average dropped 2.09% or 200.24 to close at 9,388.64. The broader Topix fell 1.8% to close at 824.60 with 20 stocks losing for every gainer.

Of the 225 stocks in the Nikkei index, 11 gained, 209 decreased and 5 unchanged.

The yen approached its 15-year high against the dollar and also rose to a record high against the euro as Asian equities dropped paving the way for resurgence of the yen.

Household sentiment dropped for a third month in September, adding to signs that there is slowdown in domestic demand.

The confidence index dropped to 41.2 in September from 42.4 in August, the Cabinet Office said in Tokyo Tuesday.

Japan is all set to pass China as the largest U.S. creditor for the first time since more than two years.

Japan added $55.3 billion of U.S. Treasuries this year, increasing its total to $821 billion, Treasury Data show. China cut its stake by $48.1 billion to bring the total to $846.7 billion.

The Osaka Securities Exchange merged its Jasdaq and Hercules markets, launching a new Jasdaq market for start-up companies.

The new market lists 1,005 start-ups with market cap of 9 trillion yen, surpassing South Korea’s market.

Nippon Telegraph and Telephone Corp said Tuesday it successfully concluded the tender offer it had launched for Dimension Data Holdings Plc of South Africa. As of Monday, the Japanese company had acquired 93% stake in the South African information systems company.

Finance Minister Yoshihiko Noda said Tuesday morning the Group of Seven finance ministers and central bankers confirmed that excessive foreign exchange volatility will adversely affect the stability of economic and financial systems.

Noda was speaking at a press conference after a morning cabinet meeting on the G-7 meeting in Washington over the weekend.

Marubeni Corp said it would announce a joint venture with Google and other companies to develop a submarine power cable network on the Atlantic coast of the U.S.

The Nikkei Newspaper said that Marubeni will hold 15% stake in the joint venture, which will soon start a feasibility study on the project. The venture hopes to get approvals from the U.S. Federal government and the state governments of New Jersey, Delaware, Maryland and Virginia by 2013 to lay a 2,000 kilometer cable network to be laid by Atlantic Grid development of the United States, Nikkei said.

An auction to settle credit default swaps on Takefuji Corp will be held on October 28 after the consumer lender filed for bankruptcy, according to a Web site run by bid administrators Markit Group Ltd and Creditex Group Inc.

Gainers & Losers

Central Japan Rail led gainers in the Nikkei with a rally of 1.59% to 637,000 yen followed by MS&AD Insurance 1.53% to 2,055 yen, Shinsei Bank Ltd 1.45% to 70 yen, Tokio Marine Holdings 0.89% to 2,374 yen, Mitsubishi Corp 0.49% to 2,046 yen and Mitsubishi Materials 0.4% to 254 yen.

Oki Electric Industries led decliners in the index with a drop of 16.22% to 62 yen followed by Fast Retailing 9.77% to 11,180 yen, CSK Corp 5.81% to 292 yen, Maruha Nichiro 5.76% to 131 yen, Mazda Motor 5.02% to 208 yen and Fuji Electric Holdings 4.76% to 200 yen.