Japan Stocks in 4-day Rally; Sharp Increase in Capital Spending

Nigel Thomas
01 Jul, 2011
New York City

The benchmark index in Tokyo extended gains for the fourth day and added 2% in the week. The latest survey of capital spending showed a sharp jump and large companies are planning to increase capital spending by 4.2% in the current fiscal year. Japan launched electricity conservation campaign.

[R]4:00 PM Tokyo – The benchmark index in Japan extended gains for the fourth day in a row and added 2% in the week. The latest survey of capital spending showed a sharp jump and large companies are planning to increase capital spending by 4.2% in the current fiscal year. Japan launched electricity conservation campaign.[/R]

The benchmark index extended gains for the fourth day in a row as Greek worries eased after the passage of austerity vote. The latest Tankan survey indicated sharp increase in capital spending by large companies.

Japanese government kicked off energy conservation campaign and Hoya Corp agreed to sell its Pentax camera business to Ricoh.

The latest manufacturing sentiment survey also bolstered investors’ enthusiasm. Then Bank of Japan’s Tankan survey showed large manufacturers estimate business conditions to improve in the next three months and the index for September at plus 2.

The central bank survey of manufacturing and non-manufacturing sectors plan to increase capital spending by 4.2% in fiscal 201, higher than earlier estimate of 0.4% in the previous survey before the March 11 earthquake.

The Nikkei 225 Stock Average increased 0.5% to 9,868.07 and the broader Topix index added 0.6% to 853.86. The Topix index gained for four days in a row, longest advance since nine-day rise in February.

Tokyo Stock Exchange first section trading volume fell to 1.67 billion shares from 1.9 billion shares on Thursday. Advancers led the decliners by 884 to 615.

The yen eased to 80.90 from 80.70 against one dollar and to 117.25 from 116.65 against one euro.

Stock Movers

Industrials and capital equipment makers increased after the release of Tankan survey.

Fanuc led the gainers in the Nikkei and soared 5.5% to 14,110 yen on the higher demand expectations for industrial robots.

Toyota Motor increased 1.1% to 3,335 yen and Nissan Motor added 1% to 850 yen. Honda Motor advanced 0.9%.

After the release of the survey, Sony Corp added 0.5% and Dainippon Screen Manufacturing Co. gained 3.8% to 708 yen.

Hoya Corp increased 4% to 1,845 yen after it agreed to sell its Pentax camera brand and business to Ricoh Co. Ricoh declined 0.2% to 887 yen.

Point Inc decreased 4.7% after it reported 42% decline in earnings in the quarter to May.

Shimamura Co. fell 1.3% after it reported first quarter profit decline of 21%.

Gas appliance makers increased after the government started its campaign to conserve electricity. Rinnai increased 1.6% to 5,890 yen and rival Notz increased 6.4% to 1,572 yen.

Tokyo Electric Power Co. increased 0.6% to 328 yen after the troubled utility installed water circulation system to cool nuclear rods at Fukushima plant.