Yen Strength Worries Japan; Chip Equiment Makers Fall

Nigel Thomas
02 Aug, 2011
New York City

Stocks in Tokyo edged lower and the yen traded near record high. The indexes and electronics makers fell after the U.S. manufacturing index dropped to a 2-year low. Electronic chip equipment makers fell after Tokyo Electron cut its full year out by half. Nippon Soda gained on the revised outlook.

[R]4:30 PM Tokyo – Stocks in Tokyo edged lower and the yen traded near record high. The indexes and electronics makers declined after the U.S. manufacturing index declined to a 2-year low. Electronic chip equipment makers declined after Tokyo Electron cut its full year out by half. Nippon Soda gained on the revised outlook.[/R]

Stocks in Tokyo trading declined after the yen gained and the manufacturing index in the U.S. declined to the 2-year low. The yen weakness also prompted more dialogue between the finance minister and the Bank of Japan governor.

The yen flirted near a record high as Japan struggles to rebuild in the aftermath of the March 11 earthquake. Japanese companies have been bringing the capital back from overseas markets to rebuild factories and supply chains.

The yen strength also prompted the speculation that the Bank of Japan is getting to ready to expand its asset purchase program by 5 billion to 10 billion yen from the current program of 40 billion yen.

The Nikkei 225 Stock Average decreased 1.2% to 9,844.59 and the broader Topix index fell 0.9% to 843.96.

The yen strengthened to 76.29 from 77.35 against one dollar and to 111.05 from 111.25 against one euro. The yen traded at 76.25 to a dollar on March 17 and is trading at less than 5% away from a record in the last seven decades.

Stock Movers

Electronic chip makers closed lower today after Tokyo Electron lowered its outlook on Monday.

Tokyo Electron dropped 6% to 3,960 yen after the company lowered its annual forecast by half on Monday. The chipmaker lowered its full year profit by 49% to 34 billion yen on slowing capital spending and a fall in chip equipment prices.

Dainippon Screen Manufacturing Co dropped 6% to 579 on the worries that the orders in the current quarter may be below estimates.

Advantest Corp decreased 2% to 1,345 yen and Sumco Corp declined 1.6% to 1,227 yen.

Nippon Soda Co increased 2.3% to 381 yen after the chemical maker lifted its earnings outlook for the first half by 33% to 3.2 billion yen on the rising international sales.

Sumitomo Corp added 3% to 1,122 yen after fiscal first quarter profit increased 36% to 83.6 billion yen.

Electronics makers declined after the yen inched near a record high.

Nikon declined 3% to 1,809 yen and Kyocera Corp decreased 1.2% to 8.230 yen. NTN Corp declined 5.7% and Olympus Corp fell 1.5% to 2,712 yen.

Kirin Holdings Co decreased 0.4% to 1,147 yen after it agreed to acquire a controlling stake in the Brazil based Schincariol. Kirin will spend 198.8 billion yen or $2.63 billion for the beer and soft drinks maker.

Honda Motor declined 0.2% to 3,120 yen after it reported quarterly profit and lifted its annual outlook by more than a third.