Nikkei in Tokyo Falls 1.7%; Political Worries Add to Global Uncertainties

Nigel Thomas
02 Jun, 2011
New York City

Stocks in Tokyo plunged tracking a market route in Asia. Global economic worries compounded the ongoing political uncertainties in Japan. Prime Minister Naoto Kan survived no-confidence motion only after he offered to resign after nuclear disaster is under control.

[R]5:10 PM Tokyo – Stocks in Tokyo plunged tracking a market route in Asia. Global economic worries compounded the ongoing political uncertainties in Japan. Prime Minister Naoto Kan survived no-confidence motion only after he offered to resign after nuclear disaster is under control. U.S. sales of Japanese automakers slid as much as 33%.[/R]

The benchmark stock indexes in Japan dropped halting a two-day rally after global economic slowdown worries took a center stage. Weak U.S. auto sales also dragged automakers lower.

Prime Minister Naoto Kan survived no-confidence motion after the market closed.

The Nikkei 225 Stock Average dropped 1.7% to 9,555.04 and the broader Topix index fell 1.6% to 825.76.

Markets in Shanghai, Hong Kong, Mumbai and Seoul fell between 1% and 2% and the benchmark index in Australia dropped 2.3%.

Tokyo trading volume surpassed 2 billion shares to 2.07 billion.

The yen strengthened to 80.68 from 81.25 against one dollar and rose to 115.77 from 117.30 against one euro.

The lower house of Diet rejected the no-confidence motion by 293-152 votes against Prime Minister Naoto Kan. The opposition party failed to win enough support from the dissidents in the ruling Democratic Party of Japan.

Prime minister Kan won over many in the party after he offered to resign once the nuclear crisis is under control in a televised address.

Foreign investors sold a net of 83.2 billion of Japanese shares last week according to the data released by the Ministry of Finance. The net selling is the first after net shares purchase for nine weeks in a row.

Stock Movers

Automakers closed lower after parts shortage dragged sales in the U.S.

Toyota Motor declined 3.3% to 3,270 after U.S. sales in May fell 33% and Honda Motor fell 2.4% to 3,045 yen after sales dropped 23%. Nissan Motor dropped 3.2% to 781 yen.

Stronger yen also lowered export sensitive stocks and electronics maker. Kyocera Corp declined 1.8% to 8,350 yen and Fanuc dropped 2.5% to 12,340 yen. Tokyo Electron fell 3.4% to 4,415 yen.

Ito En increased 1.7% to 1,405 yen after the beverage maker estimated current fiscal year sales to increased 2.4% to 360 billion yen.

Energy linked companies closed lower on weak oil prices in New York and Asian trading. Inpex Corp declined 3% to 575,000 yen and Japan Petroleum Exploration Co dropped 3.1% to 3,815 yen.

Tokyo Electric Power increased 2% to 305 yen but dropped to as low as 282 yen.