Nikkei in 3-day Slump, BoJ Expands Asset Purchase Program

Nigel Thomas
30 Oct, 2012
New York City

The Nikkei index in Tokyo declined for the third day and dropped to its one-month average after Bank of Japan announced the widely expected asset purchase program increase. The central bank also left its target rate range between zero and 0.1%.

[R]7:00 PM Tokyo – The Nikkei index in Tokyo declined for the third day and dropped to its one-month average after Bank of Japan announced the widely expected asset purchase program increase. The central bank also left its target rate range between zero and 0.1%. Earnings were in focus as more than 560 companies are scheduled to release results this week.[/R]

The benchmark Nikkei index in Tokyo declined in the final hour of trading after the Bank of Japan announced its expanded asset purchase program.

The market has already built expectations of a central bank action last week and had anticipated the asset purchase program expansion.

The Nikkei 225 Stock Average dropped 87.36 or 0.9% to 8,841.98 and the broader Topix Index decreased 6.84 to 733.46.

Bank of Japan Expands Asset Program

The Bank of Japan increased its asset purchase program by 11 trillion yen or $139 billion to 60 trillion yen. The central bank acted for the second time in as many months as the government increased pressure to provide more stimulus measures to the economy.

In a rare joint statement, the central bank and the government said central bank will frequently report its expectations on prices to cabinet and the government will announce its own measures to fight deflation.

Separately, the government said that industrial output declined 4.1% in September from August and fell 8.1% from a year ago.

The weakness in the latest economic data also prompted the Bank of Japan to cut its own forecast of inflation of 1% and said the goal is not likely to be reached before the end of 2014.

The Bank of Japan’s governor, Masaaki Shirakawa also said he saw higher risks for a significant slowdown in the global economy as exports to China and Europe fall.

Stocks in Review

Japan Airlines Co Ltd advanced 40 yen to 3,870 yen and All Nippon Airways slid 1.2% to 160 yen.

Japan Tobacco declined 2.4% to 2,239 yen.

Mitsui O.S.K. Lines, Ltd added 2 yen to 185 yen and Kawasaki Kisen Kaisha, Ltd closed unchanged at 97 yen and Nippon Yusen K.K. up 1 yen to 147 yen.

Honda dropped 2.7% extending the losses of 4.7% on the previous day after the car maker lowered its fiscal year net income by 20% to 375 billion yen or $4.7 billion after sales in China declined on the boycott of Japanese products.

Toyota Motor Corp. slumped 15 yen to 3,015 yen and Honda Motor Co. plummeted 66 yen to 2,333 yen and Nissan Motor Co Ltd decreased 17 yen to 653 yen. Nissan has the largest exposure to Chinese market among the three largest auto makers.

Nippon Steel fell 3 yen to 169 yen and JFE Holdings Inc slipped 19 yen to 1,072 yen. Tokyo Steel Manufacturing slid 3 yen to 247 yen.

Fujikura Ltd declined 4.6% to 226 yen after the company lowered its full-year net income forecast 50% to 2 billion yen on higher competition at home and abroad.

TDK gained 4 yen to 2,889 yen, Murata Manufacturing Co declined 60 yen to 3,825 yen and Meiko Electronics Co Ltd slumped 1.8% or 619 yen.

Shimano Inc plummeted 80 yen to 5,100 yen.

Seiko Epson Corp slumped 15 yen to 440 yen and Ricoh Co Ltd slipped 7 yen to 688 yen and Sony Corp decreased 12 yen to 928.

Canon Inc climbed 25 yen to 2,540 yen, Nikon slid 2 yen to 1,986 yen and Olympus Corp. gained 1.1% to 1,378 yen.

Nintendo Co. Ltd declined 110 yen to 10,050 yen, Fujitsu closed unchanged at 304 yen and Pioneer Corp. closed unchanged at 188 yen. Sharp Corp soared 10 yen or 6.2% to 172 yen.

Mitsumi Electric Co dropped 12% to 388 yen, the lowest since 1983, after the electronics parts maker estimated loss of 12.5 billion yen in the fiscal year ending in March.

Fanuc Corp. declined 120 yen to 12,510 yen and Komatsu Ltd dropped 26 yen to 1,620 yen. Hitachi Construction Machinery Co slipped 6 yen to 1,300 yen.

FamilyMart Co Ltd, the convenience chain operator declined 70 yen to 3,800 yen and Lawson plummeted 140 yen to 5,840 yen. Ito En Ltd slipped 5 yen to 1,516 yen.

Seven & I Holdings Co dropped 48 yen to 2,462 yen.

Yamada Denki decreased 10 yen to 3,320 yen. Nitori Holdings Co slid 10 yen to 6,470 yen, apparel retailer Shimamura slumped 30 yen to 8,210 yen and Sagami Co down 1 yen to 116 yen.

Fast Retailing Co. declined 140 yen to 17,690 yen and J. Front Retailing Co. Ltd lowered 2 yen to 417 yen.

Credit Saison Co Ltd decreased 26 yen to 1,723 yen.

Tokyo Tatemono Co., Ltd slipped 6 yen to 318 yen and Mitsui Fudosan plummeted 41 yen to 1,600 yen and Sumitomo Realty & Development Co. dropped 38 yen to 2,169 yen.

Inpex Corp decreased 2.2% to 447,500 yen and Japan Petroleum Exploration Co. declined 100 yen to 2,955 yen. Tokyo Electric Power Company, Inc. added 1 yen to 128 yen.

Mitsubishi UFJ Financial Group slid 2 yen to 360 yen and Sumitomo Mitsui Financial Group slipped 3 yen to 2,417 yen. Nomura Holdings, Inc gained 4 yen to 287 yen.