Nikkei Drops 1.5%; Hitachi Construction Up, Advantest, NTT Data Down

Nigel Thomas
28 Jul, 2011
New York City

Stocks in Japan declined on the growing prospect of the U.S. default or a credit rating downgrade and the yen edged near a record high. Advantest dropped 7% on weaker than expected sales outlook and Hitachi Construction Machinery gained 4% on 91% rise in operating income.

[R]4:00 PM Tokyo – Stocks in Japan declined on the growing prospect of the U.S. default or a credit rating downgrade and the yen edged near a record high. Advantest dropped 7% on weaker than expected sales outlook and Hitachi Construction Machinery gained 4% on 91% rise in operating income.[/R]

Stocks in Japan dropped as the prospect of the U.S. default, weak durable goods orders and record high yen knocked sentiment lower

For the first time in ten days since the debt talks gained momentum, U.S. investors began to factor the negative ramifications of the U.S. default.

The U.S. lawmakers, especially U.S. House controlled by the Republican Party, have been cavalier and reckless about the U.S. debt default or a rating downgrade. The reckless lawmakers are also putting the global economic growth at risk.

The U.S. racked up more than $5 trillion of debt during the eight years of George W Bush and passed additional $1 trillion of spending to avert a banking crisis that was finally approved by the Congress after the election of President Barack Obama.

U.S. total debt now stands at $14.3 trillion and the President Obama needs at least $1 trillion of more debt for each of the next two years.

Most of the increase in debt has gone in paying for wars in Iraq, Afghanistan and Libya and supporting defense lobby and prescription drug plan for senior citizens. Three wars that are consuming as much as $0.6 trillion in expenses are increasingly unsustainable as the U.S. struggles with the heavy debt load and high unemployment of 9%.

The Nikkei 225 Stock Average decreased 1.5% to 9,901.35 and the broader Topix index fell 1.3% to 848.37.

Trading volume jumped above the average of the last week to 1.79 billion shares and declining shares outnumbered the gainers by 1,288 to 278.

The yen eased to 77.10 from 77.13 against one dollar and to 111.01 from 111.05 against one euro.

Stock Movers

Industrials and capital equipment makers decreased as jitters related to the U.S. debt talks dragged broader market indexes and the yen edged towards a record high.

Advantest dropped 7% to 1,400 yen after the second largest chip equipment maker said quarterly profit declined 57% from a year ago to 346 million yen and warned that the orders growth may be lower than expected in the current quarter. Sales rose 14% from a year ago in the quarter.

Chugoku Electric Power Co declined 2.1% to after it estimated first half loss of 4 billion yen compared to net income of 1.2 billion yen a year ago.

Fujitsu General Ltd soared 5.1% to 624 yen after it lifted its net income estimate for the first half to 3.5 billion yen from 1.7 billion yen a year ago period.

Hitachi Construction Machinery added 3.8% to 1,745 yen after the June quarter net soared 65% to 2.3 billion yen and operating profit soared 91% to 8.2 billion yen.

Keihin Corp increased 1% to 1,770 yen after the parts and machinery maker revised higher full-year income to 7.1 billion yen from 2.6 billion yen.

Panasonic increased 0.5% to 929 yen on the speculation that the company may sell its refrigerator and washing machine operations of Sanyo Electric in Japan and Southeast Asia to Haier Group Co based in China.

Nippon Kagaku Yakin jumped 41% 99 yen after NTN Corp agreed to pay 100 yen a share or 526 million yen to acquire the bearing maker.

NTN Corp gained 3% to 480 yen after it estimated full year net to increase 22%.

NTT Data Corp plunged 5% to 270,400 yen after a report in the Nikkei newspaper estimated operating profit in the quarter to June declined 10% to 12 billion yen.