Yen Weakness Lifts Nikkei in Tokyo Above 8,800

Nigel Thomas
21 Jun, 2012
New York City

Trading sentiment in Tokyo recovered after the yen eased against the dollar. However, the latest manufacturing decline in China dampened the machinery stocks. Softbank gained on the hopes of more Apple products sales. Foreign investors stepped up buying of Japanese stocks last week.

[R]6:30 PM Tokyo – Trading sentiment in Tokyo recovered after the yen eased against the dollar. However, the latest manufacturing decline in China dampened the machinery stocks. Softbank gained on the hopes of more Apple products sales. Foreign investors stepped up buying of Japanese stocks last week.[/R]

Trading sentiment in Tokyo recovered after the yen weakened and the U.S. Federal Reserve did not announce substantial measures to stimulate the economy.

The modest monetary step by the Fed was widely perceived positive by traders and loosened the yen. Separately, the central bank also lowered its estimate of the U.S. GDP growth for each of the next three years and estimated higher peak unemployment and softer inflation.

The Nikkei 225 Stock Average gained 71.76 to 8,824.07 and the broader Topix index increased 6.62 to 753.96.

In trading on the main board of the Tokyo Stock Exchange turnover increased to 1.79 billion shares from 1.53 billion on Wednesday.

The yen was nearly unchanged at 79.36 against one dollar and investors sharpened focus on domestic companies on the persistent strength in the currency.

Foreign investors returned to Japanese equities last week and increase net exposure by 58.8 billion yen or $741 million after net selling stocks for eight weeks in a row, according to the latest data from the Ministry of Finance.

A private survey conducted by HSBC showed industrial activity index in China declined to a seven month low to 48.1 in June from 48.4 in May. The survey reading in the month was below 50, which indicates a contraction, for the eight month in a row.

Export orders and prices were at their lowest since 2009. China has accelerated investment in areas once reserved for private sectors like railroads, hospitals and electricity generation and transmission and relaxed banking capital requirements in the recent months.

Stock Movers

Mitsubishi Heavy Industries Ltd extended losses for the second day by 0.6% or 2 yen to 311 yen after a California court ruled that the company was responsible for a radioactive leak at a nuclear plant and did not test pipes before installation.

Kansai Electric Power Company, Inc dropped 25 cents to 963 yen and Tokyo Electric Power gained 4 yen to 164 yen.

Daio Paper Corp edged up 0.2% or 446 yen after Hokuetsu Kishu Paper Co is said to take 20% stake in the company for 10 billion yen according to a report in the Nikkei business daily. Hokuetsu increased 1.7% or 7 yen to 409 yen.

Daio dropped 21% from its high of 740 yen last year after it former chairman was linked to using 10 billion yen company funds for personal gains last year.

Weaker yen lifted automakers and electronics exporters. Toyota Motor advanced 35 yen to 3,085 yen and Honda Motor Co. increased 89 yen to 2,665 yen and Nissan Motor Co Ltd gained 14 yen to 762 yen.

Sony Corp fell 2 yen to close at 1,101 yen and Panasonic Corp closed up at 17 yen to 619 yen. Toshiba increased 4 cents to 299 yen.

Renesas Electronics Corp increased 3% on media reports that the largest shareholder in the company has agreed to extend capital of 50 billion yen during its restructuring.

Olympus Corp slumped 9 yen to 1,170 yen, Nikon advanced 45 yen to 2,397 yen and Fanuc Ltd declined 120 yen to 12,840 yen. Canon Inc gained 45 yen to 3,275 yen.

Komatsu Ltd decreased 15 yen to 1,920 yen and Hitachi Construction Machinery Co slipped 10 yen to 1,513 yen after Chinese manufacturing shrank for the eight month in a row.

Inpex Corp rose 0.9% to 464,000 yen and Japan Petroleum Exploration Co. dropped 25 yen to 3,105 yen.

Mitsui O.S.K. Lines, Ltd fell 4 yen to 289 yen; Kawasaki Kisen Kaisha, Ltd decreased 4 yen to 154 yen and Nippon Yusen K.K. slid 2 yen to 217 yen.

Fast Retailing Co. gained 110 yen to 15,460 yen and J. Front Retailing Co. Ltd added 6 yen to 394 yen.

Mitsubishi UFJ Financial Group rose 2 yen to 372 yen and Sumitomo Mitsui Financial Group added 2 yen to 2,539 yen. Nomura Holdings, Inc was unchanged to 284 yen.

Credit Saison Co Ltd increased 12 yen to 1,572 yen.

Tokyo Tatemono Co., Ltd rose 3 yen to 288 yen and Mitsui Fudosan increased 12 yen to 1,442 yen and Sumitomo Realty & Development Co. gained 19 yen to 1,844 yen.

Nippon Steel fell 1 yen to 179 yen and JFE Holdings Inc added 6 yen to 1,348 yen.