Weak Machinery Orders Drive Japan Stocks Lower, Kansai Electric Falls

Marcus Jacob
13 Jun, 2011
New York City

Stocks in Japan declined after core machinery orders declined in April surprising many investors and analysts. Utilities are expected to follow Kansai Electric announcement to cut power consumption by 15% in the summer months.

[R]5:00 PM Tokyo – Stocks in Japan declined after core machinery orders declined in April surprising many investors and analysts. Utilities are expected to follow Kansai Electric announcement to cut power consumption by 15% in the summer months.[/R]

The Nikkei 225 Stock Average fell 0.7% to 9,448.21 and the broader Topix index dropped 0.6% to 812.26.

Tokyo trading volume fell to 1.44 billion shares from 1.8 billion on Friday and trading volume dropped to the lowest for the year to 900.1 billion yen.

The yen weakened to 80.61 from 79.71 against one dollar and rose to 116.10 from 115.60 against one euro.

Machinery orders declined 3.3% in April from March when they rose 1% according to the Cabinet Office. The decline was largely driven by the supply chain disruptions and is expected to rebound on the strong demand in the second half.

The orders edged 0.2% lower from a year ago and the revised calculation method excludes mobile phone manufacturing. The orders are seen as a leading indicator of the level of capital spending in three to six months.

Stock Movers

Utilities were in focus after Kansai Electric Power Co declined 2% to 1,157 yen. The utility on Friday asked customers to decrease power consumption as production falls after lost capacity.

Kansai requested customers to cut consumption by 15% in the next two months of summer and other power companies are expected to make similar announcements.

Toyota Motor declined 2.4% to 3,220 yen after it estimated 31% decline in net profit in the current year. Honda Motor fell 2.5% to 2,911 yen and Nissan Motor eased 1.1% to 784 yen.

Toyota auto parts supplier declined 2% to 2,789 yen.

Japan Tobacco dropped 3.5% to 303,500 yen after the company said cigarette sales in April and May fell sharply after earthquake damaged production facilities.

Energy linked companies closed lower after crude oil prices in New York and Tokyo eased. Inpex dropped 1.7% to 578,000 yen and Japan Petroleum Exploration fell 1.7% to 3,835 yen.