Nikkei Halts Nine Weeks of Decline, Japan's GDP Revised Higher

Nigel Thomas
08 Jun, 2012
New York City

Stocks in Japan plunged on global worries despite better than expected domestic economic data. The GDP in the final quarter of fiscal year ending in March increased 1.2% and current account surplus was lower than expected in April. The Nikkei halted nine week of losing streak.

[R]6:30 PM Tokyo – Stocks in Japan plunged on global worries despite better than expected domestic economic data. The GDP in the final quarter of fiscal year ending in March increased 1.2% and current account surplus was lower than expected in April. The Nikkei halted nine week of losing streak.[/R]

Stocks in Tokyo trading plunged on the final day of the week when June futures and options expired at the opening what is termed as “special quotation.”

For the week, the Nikkei lost most of its 2.4% gain and closed barely up but managed to halt its nine weeks of losing streak. The Nikkei index is still down 17.5% from its peak on March 27.

The Nikkei 225 Stock Average declined 180.46 or 2.1% to 8,459.26 and fell to the six month low and the broader Topix index shrank 13.01 or 1.8% to 717.74.

Trading volume surged to 2.35 billion shares, the highest since March 15 on the expiration of quarterly Nikkei futures and monthly index options.

The better domestic economic data did little to revive market fortunes. The GDP growth data was revised higher to 1.2% from the earlier estimate of 1% in the quarter ending in March on higher than expected construction spending. On an annualized basis the GDP increase was 4.5%, ahead of expectations of more than 4% by many economists.

Capital spending was revised to an increased 2.1% from the earlier estimate of the decline of 3.9% and private consumption was revised higher to 1.2% from the previous estimate of 1.1% increase.

Current account surplus in April was 333.8 billion yen. The broadest measure of the earnings of corporation from international trade was significantly lower than expected as most corporation shift exports to regions near customers as the yen strengthens and imports rise as the nation switches to fossil fuel to replace the nuclear power.

Almost all of trade surplus came from the earnings from overseas assets of 1.398 trillion yen, an increase of 7.4% from a year ago month offset by the deficit in goods and services of 962.5 billion yen in the month.

The trading in week started with anticipation of central bank action in Europe and in the U.S. and a set of specific steps from the meeting of G7 ministers and bankers. However, the central bank in Europe passed on most of the burden to politicians and the Bank of England held its key rate as held for three years. The U.S. Fed failed to detail any action to revive the weakening jobs market.

The G7 ministers meeting also failed provide a clear direction as how the slow moving but deepening crisis in the euro zone will be stemmed from reaching out to larger nations like Spain and Italy and drag the world economic growth with it.

Stock Movers

Financials and insurance companies were among the leading decliners a day after topping the gainers.

Kansai Electric Power Company, Inc decreased 5 yen to 1,052 yen and Tokyo Electric Power fell 3 yen to 158 yen.

Chubu Electric Power slides 0.7%, Shikoku Electric Power Co added 1.7% and Hokkaido Electric Power gained by 1.7%.

Toyota Motor slumped 40 yen to 3,020 yen and Honda Motor Co. declined 46 yen to 2,491 yen and Nissan Motor Co Ltd decreased 19 yen to 745 yen.

Sony Corp shrank 57 yen to close at 1,015 yen and rebounded for the second day from the 32-year low and Panasonic Corp closed down at 7 yen to 543 yen. Toshiba decreased 10 yen to 288 yen.

Panasonic is likely to make $630 million investment in the scandal plagued Olympus and become its largest stockholder according to local media reports.

Olympus Corp dropped 49 yen to 1,297 yen, Nikon closed down at 52 yen to 2,204 yen and Fanuc Ltd declined 310 yen to 13,420 yen. Hitachi Ltd decreased 12 yen to 447 yen.

Canon Inc slumped 55 yen to 3,130 yen and said in a statement that it will spend as much as 50 billion yen to buy back up to 1.4% of its shares before the end of July.

Komatsu Ltd shrank 41 yen to 1,843 yen, Hitachi Construction Machinery Co decreased 22 yen to 1,440 yen.

Inpex Corp slipped 2.7% to 441,500 yen and Japan Petroleum Exploration Co. declined 148 yen to 2,927 yen.

Mitsui O.S.K. Lines, Ltd decreased 7 yen to 266 yen; Kawasaki Kisen Kaisha, Ltd fell 4 yen to 139 yen and Nippon Yusen K.K. down 5 yen to 203 yen.

Nippon Sheet Glass Co Ltd fell 3 yen to 81 yen after the Nikkei business daily reported that the company has no plans to raise capital and may slow production at some of its plants.

Asahi Glass Co Ltd slides 17 yen to 524 yen.

Fast Retailing Co. declined 780 yen to 15,250 yen and J. Front Retailing Co. Ltd decreased 9 yen to 369 yen.

Mitsubishi UFJ Financial Group slides 8 yen to 347 yen and Sumitomo Mitsui Financial Group dropped 52 yen to 2,350 yen. Nomura Holdings, Inc closed down at 6 yen to 268 yen.

Credit Saison Co Ltd declined 53 yen to 1,519 yen.

Tokyo Tatemono Co., Ltd decreased 9 yen to 264 yen and Mitsui Fudosan shrank 30 yen to 1,353 yen and Sumitomo Realty & Development Co. slumped 32 yen to 1,647 yen.

Nippon Steel slides 5 yen to 168 yen and JFE Holdings Inc declined 35 yen to 1,254 yen.