June Quarter Growth in Japan Falls to 1.4%, Nikkei Flat

Nigel Thomas
13 Aug, 2012
New York City

Japan reported a sharp decline in economic growth in the second quarter as consumer spending growth eased. Stocks were nearly flat on the hopes of additional stimulus measures. Taiheiyo Cement Co dropped 5% after quarterly profit was lower than expected.

[R]7:30 PM Tokyo – Japan reported a sharp decline in economic growth in the second quarter as consumer spending growth eased. Stocks were nearly flat on the hopes of additional stimulus measures. Taiheiyo Cement Co dropped 5% after quarterly profit was lower than expected.[/R]

Stocks in Tokyo traded lower after Japan’s economy expanded at a slower pace in the second quarter and trading volume fell sharply as most companies began a weeklong summer festival holiday.

The gross domestic product rose 0.3% in the second quarter following the 1.6% gain in the first quarter, the nation’s Cabinet Office said.

The economic growth declined sharply after consumption growth fell to 0.1% increase from 1.2% increase in the quarter to March. The sharp reversal in consumption prompted for additional stimulus from the government.

The government’s incentives to purchase fuel-efficient cars have supported the durable goods spending. Durable goods spending increased 3.1% and services increased 0.2% in the quarter.

Imports exceeded exports in the quarter and cut 0.1 percentage point from the GDP calculation.

From a year ago, gross domestic product rose 1.4% in the quarter to June compared with 5.5% in the prior quarter.

The Nikkei 225 Stock Average fell 0.1% to 8,855.15 and the broader Topix was nearly unchanged at 746.95.

Stocks in Review

Dai-ichi Life increased 1.2% to 81,900 yen after the life insurance company said it will buy as much as 20% stake in the U.S. based mutual fund manager Janus and help the company market its funds in Japan.

Taiheiyo Cement dropped 5% to 171 yen after the cement maker reported operating profit of 490 million yen, sharply below analysts’ estimate as high as 1 billion yen.

Shipping companies declined on the worries that the additional decline in iron ore prices may dampen freight rates.

Mitsui O.S.K. fell 3.5% to 223 yen and the freight liner said that the tanker that collided with the U.S. Navy destroyer near the Strait of Hormuz in the Persian Gulf is back in service.

Daiwa House declined 4% to 1,098 yen after the company agreed to buy Tokyo based international contractor Fujita.

Tokio Marine Holdings Inc gained 4% to 1,904 yen after the company reported net income fell 39% to 33.7 billion yen in the quarter to June and guided 105 billion yen for the fiscal year.

Nippon Sheet Glass Co Ltd shot up 11% after a report in the Nikkei newspaper said that the company is expected to resume the construction of a Vietnamese touch screen panel plant after six months on the improved business conditions.