Japan GDP Expands in March Quarter, Volatile Stocks in Tokyo

Marcus Jacob
17 May, 2012
New York City

Stocks in Tokyo rebounded in choppy trading after GDP in the last fiscal quarter to March increased 4.1% from a year ago. The GDP declined 0.01% in the year after exports plunged on supply chain disruptions. Toshiba said it will stop making television sets in Japan as the unit declares a loss.

[R]8:30 PM Tokyo – Stocks in Tokyo rebounded in a choppy session after GDP in the last fiscal quarter to March increased 4.1% from a year ago. The GDP declined 0.01% in the fiscal year after exports plunged on supply chain disruptions. Toshiba said it will stop making television sets in Japan as the unit declares a loss.[/R]

Stocks in Japan closed higher in a choppy session after GDP rose 1% in the quarter to March from the previous quarter and rose 4.5% from a year ago quarter.

Market sentiment was also fragile after Greek turmoil deepened and the worries in the euro zone spread to Spain and Italy as bond yields rise.

ECB President Mario Draghi increased pressured on Greek leaders to stay in the euro zone but also highlighted the limits of the willingness of the central bank. The bank also said it has stopped working with some undercapitalized Greek banks but left open the access to emergency funding window at a higher interest cost.

Most of the Greek banks have been funding their operations with the access to these short term loans as more depositors withdrew money from the banking system.

Yesterday, Greek President cited data from the Greek central bank and said 700 million euros have left banks on Monday alone and additional 100 million euros are likely to leave before the next election.

Greek central bank said approximately $4 billion have left banking system every month in the years 2010 and 2011 and in the first quarter of 2012 and $6.5 billion were withdrawn last month alone.

Greek president worked for the sixth time in a failed bid to form a unity government. Greeks are expected to vote again on June 17.

The Nikkei 225 Stock Average increased 75.42 to 8,876.59 and the broader Topix index gained 8.28 to 747.16.

GDP Growth Accelerates

GDP in the March quarter increased 1% from the previous quarter after the growth in the December quarter was revised to zero.

Domestic demand drove the expansion as international markets offered few opportunities to exporters for growth.

Consumer spending which accounts for 60% of the GDP increased 1.1% and household spending on durable goods rose after government offered subsidies to purchase environmental friendly vehicles.

New vehicle sales in March surged 78.2% from a year ago to 497,959 units according to the Japan Automobile Association.

Exports in the quarter increased 2.9% and in imports rose 1.9%. For the fiscal year ending in March, GDP decreased 0.01% after rising 3.2% in the fiscal year ending in March 2011.

The decline in GDP in the last fiscal year was largely related to the fall in exports as the nation battled the tsunami and earthquake and supply chain problems linked to Thailand. Japan recorded trade deficit in the last fiscal year of 4.41 trillion yen or $54.9 billion, the first deficit in several decades.

In the current fiscal year, the GDP is expected to grow 2% as the Bank of Japan offered more stimulus in April and domestic consumption and rebuilding efforts provide impetus to the economic expansion.

Stock Movers

Sharp Corp advanced 21 yen to 391 yen.

Kansai Electric Power Company, Inc decreased 8 yen to 1,079 yen and Tokyo Electric Power slipped 5 yen to 165 yen.

Toyota Motor soared 45 yen to 3,145 yen and Honda Motor Co. surged 60 yen to 2,660 yen and Nissan Motor Co Ltd gained 25 yen to 777 yen.

Sony Corp gained 43 yen to 1,161 yen. Panasonic Corp closed up at 19 yen to 565 yen and Canon Inc increased 20 yen to 3,395 yen.

Toshiba increased 5.5% to 322 yen after the TV maker said it will stop producing television in Japan after it reported a loss in the unit on falling prices and a stronger yen.

Olympus Corp advanced 48 yen to 1,147 yen, Nikon rose 7 yen to 2,329 yen and Fanuc Ltd soared 140 yen to 13,370 yen. Hitachi Ltd increased 15 yen to 490 yen.

Komatsu Ltd surged 33 yen to 1,992 yen and Hitachi Construction Machinery Co soared 109 yen to 1,645 yen.

Melco Holdings soared 7% to 1,834 yen after net income increased 22% to 5.4 billion yen in the financial year to March.

Inpex Corp rose 0.9% to 462,500 yen and Japan Petroleum Exploration Co. gained 20 yen to 3,090 yen.

Mitsui O.S.K. Lines, Ltd increased 11 yen to 274 yen; Kawasaki Kisen Kaisha, Ltd added 8 yen to 140 yen and Nippon Yusen K.K. closed up at 10 yen to 210 yen.

Nippon Electric Glass Co Ltd advanced 20 yen to 556 yen and Asahi Glass Co Ltd closed up at 27 yen to 577 yen.

Fast Retailing Co. shrank 120 yen to 16,700 yen and J. Front Retailing Co. Ltd fell 2 yen to 375 yen.

Mitsubishi UFJ Financial Group added 7 yen to 351 yen and Sumitomo Mitsui Financial Group surged 51 yen to 2,393 yen. Nomura Holdings, Inc closed up at 15 yen to 284 yen.

Credit Saison Co Ltd increased 3.9% to 1,658 yen after the consumer lender at high interest charges reported higher than expected earnings.

Tokyo Tatemono Co., Ltd rose 6 yen to 254 yen and Mitsui Fudosan increased 16 yen to 1,279 yen and Sumitomo Realty & Development Co. gained 27 yen to 1,695 yen.

Nippon Steel added 7 yen to 186 yen and JFE Holdings Inc surged 71 yen to 1,368 yen.