Nikkei Falls 1.4% Tracking China Weakness, SoftBank Cut to Junk Level

Hiruki Nakamura
08 Jul, 2013
New York City

Nikkei in Tokyo edged lower after a surge at the end of last week and the yen dropped to a 5-week low against the dollar. Weak Chinese market sentiment weighed on machinery makers. SoftBank declined 3% after its long-term debt rating was lowered to junk status. Olympus plans to raise $1.16 billion.

[R]5:00 PM Tokyo – Nikkei in Tokyo edged lower after a surge at the end of last week and the yen dropped to a 5-week low against the dollar. Weak Chinese market sentiment weighed on machinery makers. SoftBank declined 3% after its long-term debt rating was lowered to junk status. Olympus plans to raise $1.16 billion.[/R]

Market indexes in Tokyo traded lower as investors took advantage of recent market gains to lock profits. The yen declined to a 5-week low and weakness in Chinese markets dragged indexes in Tokyo.

The Nikkei 225 Stock Average dropped 200.63 or 1.4% to 14,109.34 and the Topix inched slid 16 or 1.3% to 1,172.58.

The yen edged higher in Tokyo trading at 101.14 against one dollar.

Stocks in Review

Toyota Motor Corp slipped 60 yen to 6,250 yen and Honda Motor Co. declined 80 yen to 3,760 yen. Nissan Motor Co Ltd fell 8 yen to 1,048 yen.

Sony dropped 43 yen to 2,152 yen. Canon Inc slid 45 yen to 3,330 yen and Nikon declined 12 yen to 2,334 yen.

China linked machinery makers led the decliners after anemic trading in Shanghai after Chinese government said it is prepared to cut off lending to construction companies and banks to consolidate the industry.

Fanuc Corp decreased 230 yen to 14,540 yen and Komatsu declined 3% to 2,257 yen.

Softbank Corp slumped 200 yen to 5,680 yen after the Standard & Poor's downgraded long-term credit rating to """"junk"""" or below investment grade after the debt fueled acquisition of Sprint Nextel for of $24 billion. After cut the debt rating, it’s five-year credit default swap widened to nearly 210 basis points.

Seven & I Holdings Co rose 20 yen to 3,775 yen Fast Retailing Co. slipped 200 to 36,800 yen.

Mitsubishi UFJ Financial Group fell 8 yen to 638 yen and Sumitomo Mitsui Financial Group slid 90 yen to 4,670 yen.

Olympus said plans to raise $1.16 billion to expand its medical equipment business and modernize its production and rebuild its balance sheet after an accounting scandal that dragged its stock down 80%. The company plans to issue 32 million new shares with an option to sell additional 5 million shares.

Tokyo Electric Power Company, Inc climbed 4.3% to 628 yen after the government introduced new nuclear safety regulations utility providers applied for safety inspections of 10 of its idled plants since Fukushima disaster.