Japan Lowers Economic Outlook; Banks, Autos Down

Nigel Thomas
12 Aug, 2011
New York City

Stocks in Japan fell and the Nikkei index dropped 3.6% after a volatile week of trading. The government lowered its economic outlook in the current year to 0.5% from 1.5% on the persistent supply chain and production problems after the earthquake and power shortage. Banks are down 20% in the year.

[R]4:30 PM Tokyo – Stocks in Japan edged down and the Nikkei index fell 3.6% after a volatile week of trading. The government lowered its economic outlook in the current year to 0.5% from 1.5% on the persistent supply chain and production problems after the earthquake and power shortage. Banks are down 20% in the year.[/R]

Stocks in Japan traded lower and erased early gains after the government lowered its assessment of the economic outlook.

The Cabinet Office cuts its fiscal year economic growth outlook to 0.5% from 1.5% on production challenges after the March 11 earthquake and ongoing economic weakness in the U.S. and rising debt stress in the euro-zone.

The government however estimated economic growth to pick in the next fiscal year to between 2.7% and 2.9%.

Earlier in the week, Tokyo stocks extended losses for four of the five day and the benchmark index flirted with the 8,600 lows last seen on March 15.

The yen edged lower to 76.78 from 76.60 in volatile trading and traded against one euro at 110.10 from 110.01 at yesterday’s close.

The Nikkei 225 Stock Average declined 0.2% to 8,963.72 and the broader Topix index fell 0.4% to 768.19. For the week, the Nikkei declined 3.6%.

The Nikkei is down 16% from its peak on February 21 and dropped 12% in the year but still above its March 15 low of 8,605.15.

Trading volume was near 2 billion shares, just above the last week’s daily average.

Stock Movers

Canon Inc gained 5.6% to 3,590 yen after the camera and office equipment maker said in a filing with the exchange that plans to buy back 50 billion yen or 1.2% of its shares before Sept 16.

Dai-Ichi Life Insurance Co. added 2.2% to 93,000 yen after it reported first quarter net tripled to 32.3 billion yen from 10.4 billion yen in the quarter a year ago.

T&D added 0.3% to 1,624 yen.

China linked machinery and equipment makers declined after China’s banking regulators asked banks to set higher standard for commercial property loans.

Hitachi Construction Machinery declined 2% to 1,470 yen and Komatsu Ltd declined 0.8% to 2,005 yen.

Auto stocks turned lower and dropped to ten-month low after a U.S. based industry forecaster lowered its outlook for unit sales.

Toyota Motor declined 1.1% to 2,819 yen and Honda Motor Co. decreased 1.3% to 2,537 yen. Nissan Motor Co fell 2.3% to 693 yen.

Financials rose after falling for three days in a row but market to worry that the U.S. economic weakness and euro-zone debt crisis may force upon more losses in Japanese banks.

Mitsubishi UFJ Financial Group Inc fell 0.1% to 357 yen and declined 19% for the year and Sumitomo Mitsui Financial added 2 yen to 2,227 yen and dropped 23% in the year so far.