Nikkei in Tokyo Declined1.5%; Machinery and Steel Makers Fall

Nigel Thomas
23 May, 2011
New York City

Stocks in Tokyo fell on the worries that exports to China may suffer. The latest read on manufacturing index in China prompted a broker to lower its view on the makers of steel and construction machinery. The Nikkei index declined 1.5% as indexes in Asia dropped between 1% and 2%.

[R]5:00 PM Tokyo – Stocks in Tokyo fell on the worries that exports to China may suffer. The latest read on manufacturing index in China prompted a broker to lower its view on the makers of steel and construction machinery. The Nikkei index declined 1.5% as indexes in Asia dropped between 1% and 2%.[/R]

Japanese stocks declined following the weakness in Asian markets after China’s manufacturing estimate showed a weakness. The private survey showed that manufacturing declined for the second month in a row and the index dropped to 10-month low.

The weak manufacturing compounded the market jitters as the euro-zone struggles with the Greek debt restructuring and ongoing worries related to peripheral nations’ economic conditions.

The Nikkei 225 Stock Average declined 1.5% to 9.460.63 and the broader Topix index fell 1.2% to 817.68. On the first section of Tokyo Stock Exchange, trading volume was 1.82 billion shares and technical analysts estimated further market weakness.

The benchmark index Nikkei has been caught in a trading range between 9,500 and 9.750 in the last one year and market analysts are increasingly focus on the index testing 9,000 level in the summer months.

The yen traded higher in a quiet trading and closed at 81.02 to a dollar and to 115.09 against one yen from 117.10.

Stock Movers

Machinery makers led the decliners in Tokyo trading after Nomura Securities lowered its views on the sector after China’s manufacturing estimate.

Komatsu Ltd plunged 5.9% to 2,381 yen after the broker cuts its price target on the company by 11%. Hitachi Construction dropped 6% to 1,676 yen and Kawasaki Heavy plunged 4.9% to 291 yen.

The downgrade action not only dragged machinery makers but also steelmakers and companies linked to China consumption. Nomura estimated the 20% decline in demand for machinery and steelmakers and cited the latest bank tightening and a slow down in construction.

Kobe Steel Ltd declined 3.8% to 176 yen and Kawasaki Heavy Industries Ltd fell 4.9% to 291 yen. Both companies were cited in Nomura research report.

Fanuc Corp fell 4.1% to 12,300 yen and led the decliners in the Nikkei 225 Stock Average.

Solar panel makers gained on the news media speculation that the government is likely to make mandatory the installation of solar panels on the roofs of all new buildings.

Sharp Corp increased 1% to 733 yen and Ishii Hyoki soared 8.4% to 928 yen. Ulvac increased 2.5% to 1,942 yen.

Utilities were among the most active stocks and closed higher. Tohoku Electric Power increased 0.3% to 937 yen and Chubu Electric added 0.3% to 1,226 yen.