Japan in 3-day Rally; Nuclear Power Plant Restart Talks

Nigel Thomas
30 Jun, 2011
New York City

Stocks in Japan gained for the third day in a row on the expectation of faster improvement in supply chain and manufacturing output. Utilities gained on the talks of restarting at least one nuclear power plant. The Nikkei declined 0.4% in the first half.

[R]4:30 PM Tokyo – Stocks in Japan gained for the third day in a row on the expectation of faster improvement in supply chain and manufacturing output. Utilities gained on the talks of restarting at least one nuclear power plant. The Nikkei declined 0.4% in the first half.[/R]

The benchmark index extended gains for the third day in a row as Greek worries eased after the passage of austerity vote. The utilities companies advanced on the talks of restarting of several nuclear power plants. Industrials and electronics makers gained for the third day in a row.

Investors are increasingly focusing on the pace of recovery after the triple disaster in March as the supply chain worries ease and power situation improves. Steelmakers, retailers and auto and electronics makers rose for the third day in a row.

The latest data from the Ministry of Economy, Trade and Economy showed manufacturing soared 5.7% in May from April, the fastest pace since 1953.

The Nikkei 225 Stock Average increased 0.2% to 9,816.09 and the broader Topix index added 0.6% to 849.22. For the month the Nikkei added 1.3% and for the year declined 4%.

Tokyo Stock Exchange first section trading volume fell to 1.32 trillion yen, nearly 10% below its average for the year.

The yen eased to 81.20 from 80.70 against one dollar and to 116.75 from 115.77 against one euro.

Stock Movers

Utility companies gained after positive comments from regional governments on the start of nuclear power plants.

The governor of Saga prefecture showed his willingness to restart nuclear reactor if the national government takes responsibility, according to an article in the Nikkei newspaper.

The governor said he is not opposed to the restarting 36-year old nuclear reactor controlled by Kyushu Electric. Currently 35 nuclear reactors are shut down for maintenance or idled since the nuclear disaster on March 11.

Kyushu Electric increased 4.2% to 1,447 yen and Kansai Electric Power Co increased 4.6% to 1,600 yen. Chubu Electric Power Co. added 2.4% to 1,570 yen.

Industrial companies advanced on the hopes that the power situation will improve and ease the ongoing supply chain worries of the last three months.

Japan Steel Works Ltd increased 4.4% to 549 yen.

Banks gained after Basel Committee on Banking Supervision passed watered down version of banking reform that will require less increase in capital.

The new rules scheduled to be implemented between 2016 and 2018 will require an increase of only 2.5% in capital. Most large Japanese banks will not require raising new capital to meet the revised guidelines.

Mitsubishi UFJ increased 2.1% to 390 yen and Sumitomo Mitsui Financial Group Inc added 1.3% to 2,486 yen.