Japan Stocks Fall on U.S. Debt Worries; Yen Advances to 4-month High

Nigel Thomas
14 Jul, 2011
New York City

Stocks in Japan headed lower and the yen traded volatile after the U.S. debt was placed under a review at a rating agency. The yen rose to a 4-month high of 78.40 against one dollar. Shipping companies led the decliners after the freight rate index fell for the fourth day in a row.

[R]4:00 PM Tokyo – Stocks in Japan headed lower and the yen traded volatile after the U.S. debt was placed under a review at a rating agency. The yen rose to a 4-month high of 78.40 against one dollar. Shipping companies led the decliners after the freight rate index fell for the fourth day in a row.[/R]

Stocks in Japan eased after Moody’s placed the U.S. debt under watch with a negative outlook if lawmakers fail to lift debt ceiling by the end of this month. The last time Moody’s placed the US debt rating on watch was in 1995.

The industrials and automakers were on the slide after the yen hit four-month high. Tuesday, the central bank stepped up to support equities but the mood in the market soured today.

The Bank of Japan purchased 22.1 billion yen in Japanese exchange traded funds on Tuesday.

The Nikkei 225 Stock Average decreased 0.3% to 9,936.12 and earlier in the day index gained as much as 0.4% on the speculation that Japan may sell yen.

The broader Topix index fell 0.4% to 856.8 and the index was under pressure in the entire session.

The yen rose to a 4-month high of 78.45 but closed at 79.10 against one dollar. In the session the yen traded volatile and jumped as high as 1 yen.

Stock Movers

Automakers and industrials closed lower on the rise in the yen and after the rating agency places U.S. debt under watch.

Toyota Motor decreased 0.7% to 3,340 yen and Honda Motor declined 0.5%.

Chip equipment makers closed after ASML reported sales that missed its own forecast. Japanese equipment makers are likely to face lower operating margin with the sudden increase in the yen in the last six week.

Dainippon Screen dropped 4.2% to 645 yen and Advantest Corp added 2.6% to 1,473 yen.

Shipping companies declined after freight rate index in London trading fell for the fourth day in a row.

Nippon Yusen fell 1.7% to 295 yen and Kawasakii Kisen Kaisha Ltd fell 1.1% to 269 yen. Mitsui O.S.K. Lines Ltd dropped 1.6% to 420 yen.

Nisshin Steel Co. added 2% to 157 yen and Nippon Metal Industry Co saored 8% to 101 yen after Japan Metal Bulletin suggested two companies are in merger talks.

Toho Titanium Co. increased 1.7% to 2,336 yen on a broker speculation.

Toyota Auto body soared 9.3% to 1,481 yen and Kanto Auto Works increased 4% to 826 yen after the parent Toyota agreed to acquire two companies and invest $1.3 billion in the northeastern Japan region.