Nikkei in Tokyo Declines 1.7%; Thai Floods Delay Auto Production Revival

Nigel Thomas
01 Nov, 2011
New York City

The Nikkei index in Tokyo declined on fresh worries in the euro zone. The yen traded near its 3-month high after finance ministry intervened in the currency market. Japanese auto makers suffer production delays till December on Thai floods.

[R]7:00 PM Tokyo – The Nikkei index in Tokyo declined on fresh worries in the euro zone. The yen traded near its 3-month high after finance ministry intervened in the currency market. Japanese auto makers suffer production delays till December on Thai floods.[/R]

Stocks in Japan were under pressure after the U.S. based MF Global filed for a bankruptcy protection in New York.

The futures broker bet heavily on the sovereign bonds of Italy and Spain and suffered heavy losses after rating agencies downgraded Italian bonds.

Investors were also concerned after Greek Prime Minister George Papandreou decided to put the deal with the European Union to a referendum. The decision poured cold water on the market expectations that the European leaders last week solved the widening debt contagion problem.

Japan intervened in the currency market to weaken the yen on Monday. Finance ministry carried out a repeated market intervention that dragged the yen against the dollar and the euro in a move that was similar to last action on August 4.

The yen declined a fraction to 79.10 against one dollar after Japanese finance ministry intervened in the market and sold yens and currency markets analysts estimated at least $95 billion or 7.7 trillion of yen of purchase.

Finance Minister Jun Azumi in noted the aggressive stance in the market today and added, “I have repeatedly said that we will take bold action against speculative moves in the market. I will continue to intervene until I am satisfied.”

The Nikkei 225 Stock Average fell 152.87 or 1.7% to 8,835.52 and the broader Topix index declined 9.56 or 1.3% to 754.50. For the month the Nikkei increased 0.4% and the Topix gained 3.7%.

In trading on the First Section of the Tokyo Stock Exchange, 1.47 billion shares changed hands down from 1.78 billion shares trading on Monday. Of the shares traded, 956 declined and 560 rose.

Honda Withdraws Annual Earnings Outlook on Thai Floods

Thai floods are hurting Japanese automakers at the worst time when the companies are struggling to recover auto production after the March 11 earthquake.

Honda Motor withdrew its guidance for the fiscal year earnings and said its factories in Thailand may not resume normal production till December. Honda said also it will cut its production at its six plants in the U.S. and Canada between November 2 and November 10.

Thailand has been hit hard as flood water ravage one third of the nation.

Thai authorities are hoping that the diverting water from western and eastern parts of Bangkok will prevent the inner city area from flooding.

The irrigation workers are struggling to fix canal gates and a decline in sea levels after peak tides at 2.44 meter helped to drain water from Chao Phraya River.

Irrigation workers are hoping that 2 meter high walls in the Don Mueang, Laksi and Thonburi areas will prevent water from entering inner city.

Stock Movers

Toyota Motor decreased 48 yen to 2,596 yen and Honda Motor Co. closed unchanged at 2,406 yen and Nissan Motor Co Ltd fell 14 yen to 721 yen.

Honda reported fiscal second quarter revenue decreased 16.3% to 1,885.9 million yen from 2,251.9 million yen in the same quarter last year. Net income in the quarter declined 55.5% to 60.4 million yen or 33.53 yen per basic share compared to 135.9 million yen or 75.24 yen per share a year ago.

Sony Corp decreased 106 yen to 1,576 yen, Panasonic Corp fell 41 yen to 768 yen and Canon Inc decreased 45 yen to 3,555 yen. Nintendo Co. Ltd declined 290 yen to 11,780 yen.

Panasonic dropped after it estimated a large loss and said it will accelerate exiting from businesses that are not profitable. The company also plans to eliminate 17,000 positions.

Nikon Corp declined 2.4% to 1,745 yen.

Olympus Corp decreased 4 yen to 1,206 yen and traded near its lows last seen in November of 1999.

Fanuc Ltd decreased 470 yen to 12,460 yen and Kyocera closed down 90 yen at 6,920 yen and Sharp Corp fell 17 yen to 718 yen.

Mitsui OSK Lines, Ltd decreased 17 yen to 291 yen, Kawasaki Kisen Kaisha, Ltd closed down 5 yen to 158 yen and Nippon Yusen K.K. fell 6 yen to 195 yen.

Dai-ichi Life fell 3% to 88,200 yen after Greece decided put its deal with the European Union to a referendum that may delay the implementation of terms of the agreement.

Fujifilm Holdings Corp dropped 5.8% to 1,837 yen after the company lowered its annual net outlook by one third and blamed on the strong yen.

Property and Casualty insurers declined on the mounting losses related to Thailand floods.

MS & AD Insurance Group Holdings, Inc fell 1.6% or 26 yen to 1,537 yen and NKSJ Holdings Inc fell 49 yen to 1,547 yen.

Mitsubishi UFJ Financial Group fell 3 yen to 342 yen and Sumitomo Mitsui Financial Group decreased 24 yen to 2,192 yen.

Mitsubishi Corp decreased 40 yen to 1,601 yen and Mitsui & Co, Ltd fell 43 yen to 1,122 yen. Marubeni Corp decreased 5 yen to 459 yen.

Komatsu Ltd decreased 36 yen to 1,940 yen and Hitachi Construction Machinery Co decreased 44 yen to 1,496 yen.