Nikkei Climbs 0.5%; JFE Holdings Swings to Profit

Chandrasekhar Atreya
22 Oct, 2010
New York City

Japanese stocks gained on better-than-expected earnings outlook and a drop in jobless claims in the U.S. Japan takes stock of local rare earth inventory and prepares to sign agreement to develop these products with Vietnam. JFE Holdings swings back to profit in the first half of the current year.

[R]5:00 PM Tokyo, Japan – Japanese stocks gained on better-than-expected earnings outlook and a drop in jobless claims in the U.S. Japan takes stock of local rare earth inventory and prepares to sign agreement to develop these products with Vietnam. JFE Holdings swings back to profit in the first half of the current year.[/R]

Japanese stocks rallied for the first time in three days as better-than-expected U.S. earnings together with a drop in U.S. jobless claims improved investor confidence.

The Nikkei 225 Stock Average gained 0.54% or 50.23 to close at 9,426.71. The broader Topix gained 0.6% to 824.88. Of the 225 stocks in the Nikkei, 159 gained, 49 decreased and 17 were unchanged.

The Nikkei index lost 73.54 points or 0.77% in the week while the broader Topix lost 0.2%.

The yen closed at 81.16 to a U.S. dollar in Tokyo.

Following China’s virtual embargo of rare earth supplies, Minister of Economy, Trade and Industry Akihiro Ohata said Friday instructed officials to take stock of domestic company’s stockpiles of rare earth minerals.

“I gave orders to take stock of the amount Japanese companies have and when they will begin having trouble in their operations,” Ohata said after a Cabinet meeting.

Japan is all set to sign an agreement with Vietnam later in October for jointly developing rare earth minerals to reduce its dependence on China, the Nikkei business daily reported Friday.

The agreement expected to be finalized when Prime Minister Naoto Kan and Vietnamese Prime Minister Nguyen Tan Dung meet in Hanoi on October 31, the newspaper noted.

JFE Holdings Inc reported that it swung to net profit in the fiscal first half from a net loss in a year ago period, led by a rising demand for steel in Asia. The company said it posted a net profit of 46.05 billion yen in the first half ending September 30, reversing a net loss of 28.68 billion yen in a year ago period.

The company also lowered its profit forecast for the year ending March 2011 to 110 billion yen from the prior projection of 120 billion yen and cut sales projection from 3.420 trillion yen to 3.36 trillion yen.

Foreign exchange market movements prompted Brazil to take preventive steps for sudden rise of its currency, underscoring the risk faced by Japan and its investors who are looking at emerging economy assets to boost their holdings.

Brazil declared on Monday that tax on foreign purchases of Brazilian debt securities will attract 2% additional levy to 6% in order to curb a rise in the real. Brazil had in fact doubled the tax to 4% as recently as October 5 for the same reason.

Bridgestone Corp said it plans to spend 30 billion yen to build a new plant at its Kitakyushu plant to increase capacity for large and ultra large off-road tires for construction and mining vehicles.

This plant is dedicated to make special tires and with a capacity of 30 tons per day. The company will spend 29.5 billion yen to add equipment to augment daily capacity to 80 tons per day in the second half of 2012.

Sales at supermarkets in Japan fell 0.3% in September from a year earlier, with same-store sales dropping for the 22nd month in a row, the Japan Chain Stores Association reported Friday.

The decline was however less from the decline in August thanks to brisk sales of summer items due to hot weather and last-minute jump in cigarette demand before the tobacco hike in October.

Food sales increased 1.2%, marking it as the first rise in 20 months, buoyed by sales of ice cream, beer and other summer-related items.

About 70% of Japanese companies operating in the Asia-Oceania region are expected to report profit for the fiscal year 2010, according to a survey.

The survey by the Japan External Trade Organization released on Thursday showed that apart from reporting profit more than 60% of the respondents expect to expand their operations over the next year or two. The survey was done among 3,500 firms in 18 Asian and Oceania Countries.

Sumitomo Mitsui Financial Group Inc recalculated its earnings and net profit for the year ended March 31, 2010 using international accounting standards for submission to SEC on Wednesday in preparation for its planned listing in New York Stock Exchange.

The revised net profit of 646.7 billion yen was higher than the 271.5 billion yen profit it previously reported under Japanese accounting standards. The differences are mainly due to the method of calculating loan loss provisions and how profits earned by subsidiaries are treated for minority shareholders.

Domestic shipments of personal computers are expected to rise 12.4% in 2010 to 15.04 million units as compared to a year ago period, as replacement demand stays strong among consumers and business clients, IDC Japan reported Thursday.

Gainers & Losers

Oki Electric Industries led gainers in the Nikkei with a gain of 5.88% to 72 yen followed by Pioneer Corp 5.47%to 289 yen, Fuji Electric Holdings 4.28% to 195 yen, Sumitomo Osaka 3.97% to 157 yen, Hino Motors Ltd 3.53% to 381 yen and Hitachi Zosen 3.51% to 118 yen.

Isetan Mitsukoshi led decliners in the index with a drop of 3.95% to 899 yen followed by J Front Retailing 3.49% to 415 yen, Shinsei Bank Ltd 2.9% to 67 yen, Takashimaya Co 2.72% to 643 yen, Nitto Boseki Co 2.43% to 201 yen and Kyowa Kirin 1.55% to 826 yen.