Nikkei Falls Back 1%; Japan Tobacco, Yamada Denki in Focus

Nigel Thomas
12 Jun, 2012
New York City

Market sentiment in Tokyo trading was weak as investors worried that the latest Spanish bank bailout will not arrest the widening debt contagion in Europe. Retailers were in focus after government proposes to double consumption tax to 10% by 2014.

[R]6:30 PM Tokyo – Market sentiment in Tokyo trading was weak as investors worried that the latest Spanish bank bailout will not arrest the widening debt contagion in Europe. Retailers were in focus after government proposes to double consumption tax to 10% by 2014.[/R]

Market euphoria in Monday’s trading quickly reversed today and indexes dropped more than 1% on the worries that the euro zone may struggle to contain the widening financial crisis.

The latest agreement to bailout Spanish banks with 100 billion euros failed to stem the worries that Italy may be next to request a financial assistance. Italy needs to raise 35 billion euros of debt every month for the rest of the year and yield on Italian bonds have been on the rise and stayed above 6%.

Japanese rating agency R&I lowered its view on Spain to BBB+ from A and said that the latest bailout will hamper the nation’s ability to access financial markets.

The Nikkei 225 Stock Average declined 88.18 or 1% to 8,536.72 and the broader Topix index fell 5.70 to 724.37.

Retailers were in focus in Tokyo trading as the government proposes to increase consumption tax to 10% from 5% in 2014. The sharp jump in tax will increase retail sales in the next eighteen months but after that retail sales are likely to suffer.

Stock Movers

Yamada Denki declined 3% after the electronics retailer said it fiscal year operating profit fell 28% and is expected to increase 4% in the current year.

Kansai Electric Power Company, Inc slumped 16 yen to 1,045 yen and Tokyo Electric Power fell 1 yen to 159 yen.

Chubu Electric Power edged down 0.3%, Shikoku Electric Power Co slides 0.7% and Hokkaido Electric Power slipped by 1.8%.

Nissei Build Kogyo soared 10% after the construction company said it plans to buyback as much as 6% of its outstanding shares.

Toyota Motor declined 35 yen to 3,035 yen and Honda Motor Co. closed down at 28 yen to 2,534 yen and Nissan Motor Co Ltd decreased 14 yen to 759 yen.

Sony Corp declined 22 yen to close at 1,025 yen and rebounded for the second day from the 32-year low and Panasonic Corp closed down at 12 yen to 557 yen. Toshiba fell 3 yen to 297 yen.

Olympus Corp slides 6 yen to 1,238 yen, Nikon closed down at 23 yen to 2,240 yen and Fanuc Ltd shrank 170 yen to 13,530 yen. Hitachi Ltd added 1 yen to 465 yen.

Canon Inc increased 10 yen to 3,250 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 slipped 13 yen to 1,900 yen, Hitachi Construction Machinery Co slides 16 yen to 1,475 yen.

Inpex Corp inched down 0.6% to 450,000 yen and Japan Petroleum Exploration Co. declined 61 yen to 2,959 yen.

Mitsui O.S.K. Lines, Ltd decreased 5 yen to 275 yen; Kawasaki Kisen Kaisha, Ltd unchanged to 148 yen and Nippon Yusen K.K. down 4 yen to 207 yen.

Asahi Glass Co Ltd slides 2 yen to 538 yen.

Fast Retailing Co. declined 280 yen to 15,220 yen and J. Front Retailing Co. Ltd down 9 yen to 363 yen.

Mitsubishi UFJ Financial Group fell 4 yen to 347 yen and Sumitomo Mitsui Financial Group shrank 10 yen to 2,364 yen. Nomura Holdings, Inc closed down at 6 yen to 265 yen.

Credit Saison Co Ltd decreased 19 yen to 1,530 yen.

Tokyo Tatemono Co., Ltd gained 9 yen to 275 yen and Mitsui Fudosan unchanged to 1,377 yen and Sumitomo Realty & Development Co. advanced 11 yen to 1,700 yen.

Nippon Steel slides 5 yen to 167 yen and JFE Holdings Inc declined 22 yen to 1,269 yen.