Nikkei in Japan Near Five-month Low; Toshiba, Sony Rise

Nigel Thomas
24 May, 2011
New York City

The benchmark index in Tokyo closed higher after trading near five-month low. Sony traded higher after estimating third annual loss in a row. Construction machinery stocks rebounded. Shipping lines closed higher after freight rate index gained. Toshiba proposed aggressive capital expansion plan.

[R]4:30 PM Tokyo – The benchmark index in Tokyo closed higher after trading near five-month low. Sony traded higher after estimating third annual loss in a row. Construction machinery stocks rebounded. Shipping lines closed higher after freight rate index gained. Toshiba Corp proposed aggressive capital expansion plan.[/R]

Investors in Japan remained cautious as global economic backdrop worsened. The cautious outlook boosted trading in utilities and other defensive stocks.

The Nikkei 225 Stock Average increased 0.2% to 9,477.17 and the broader Topix index added 0.2% to 819.16.

Trading volume declined to 1.65 billion shares as market indexes traded in a tight range near flat line.

The yen traded in a tight range and near close hovered at 81.91 to a dollar and near 114.30 to a euro.

Asian market indexes traded lower on the worries that Greek debt may have to be restructured earlier than expected and yields on debts of Italy, Portugal, Spain and Ireland rose. The Spanish ruling party’s defeat in local elections also added to market jitters.

At close in European trading, Italy’s 10-year bond yield rose by 4 points to 4.81%. Greece’s 10-year bond soared 48 basis points to 17.05% and Ireland’s 10-year bond debt increased 32 basis points to 10.86%.

The benchmark yield on German 10-year bonds fell four basis points 3.02%.

Markets in Shanghai declined for the second day after the release of manufacturing index data and in Hong Kong were flat.

Stock Movers

Sony Corp closed higher 2.7% to 2,270 yen after the electronic equipment maker said it will post third annual loss. The company revised its consolidated results for fiscal year ended March 31 and estimated operating revenue to fall 0.3% compared to February forecast of ¥7,181 billion from ¥7,214.0 billion a year ago.

Net loss is expected to be ¥260 million compared to net income of ¥70 million forecasted in February from net loss of ¥40.8 million a year ago.

The impact of the earthquake on sales estimated to be approximately ¥22 billion. The impact on financial results also effected by unauthorized access to the PlayStation Network, Qriocity and Sony online Entertainment network services in April.

Investors focused on companies with exposure to the euro-zone. Olympus fell 1.4% to 2,444 yen and Mazda Motor declined 1% to 191 yen. Canon Inc dropped 0.7% to 3,635 yen.

Toshiba Corp increased 2.1% to 432 yen after the company released an aggressive capital expenditure plan of 1.45 trillion yen in the next three years to 2014. The company also estimated operating profit of 500 billion yen in fiscal 2013, 67% higher compared to 300 billion yen in the current fiscal year.

Shipping companies gained for the second day in a row after freight rate index in London advanced. Nippon Yusen increased 3.4% to 301 yen and Kawasaki Kisen Kaisha Ltd added 1.2% to 265 yen and Mitsui O.S.K. Lines Ltd advanced 0.7% to 427 yen.

Construction machinery stocks rebounded a day after Nomura Securities lowered its view on the sector. Komatsu Ltd increased 1.5% to 2,417 yen after falling 6% in the previous session.