Japanese Government Prepares for Back Up Stimulus Plan

Hiruki Nakamura
05 Sep, 2014
New York City

Japanese stocks closed lower and the reference index Topix struggled to wipe out losses of the year as the yen dropped to a four-year low. Finance Minister Taro Aso said a back plan for stimulus will be prepared to smooth over the April sales tax increase.

[R]4:30 PM Tokyo – Japanese stocks closed lower and the reference index Topix struggled to wipe out losses of the year as the yen dropped to a four-year low. Finance Minister Taro Aso said a back plan for stimulus will be prepared to smooth over the April sales tax increase.[/R]

Stocks in Tokyo closed lower after weak resource stocks overshadowed the surprise ECB rate cut announcement and the yen weakened to a four-year low.

The European Central Bank unexpectedly cut its lending rate by 10 basis points to 0.05% and deposit rate to minus 0.2%.

The central bank also signaled willingness to purchase as much as $1 trillion in sovereign bonds to stimulate the halting economic recovery across the euro zone, despite still resistance from German lawmakers and central bankers.

The positive news was overshadowed by the persistent weakness in resource stocks. Resource and trading companies declined on Friday and in the week after iron ore prices dropped to a five-year low.

Investors also awaited the monthly payrolls data from the U.S. and economists estimated as many as 200,000 net new jobs added in August. Economy at all levels, including government and private sector, added 209,000 jobs in July and payrolls have expanded for the sixth month in a row.

The Nikkei 225 Stock Average slid 7.50 to 15,668.68 and the broader Topix index fell 3.18 to 1,293.21. For the week, Nikkei 225 jumped 1.6%.

The yen declined to close at 105.29 against one U.S. dollar.

Stocks in Review

Artiza Networks Inc plunged 7.3% to 1,111 yen after the communication test equipment maker forecasted net income in the year may decline 67% to 255 million yen.

Dentsu Inc edged up 0.1% to 4,160 yen after the communication-related service provider reported net sales in the month of August surged 91.4% to 105.39 billion from a year ago period.

The company said revenues from television business climbed 95.1% to 49.41 billion yen and revenue from marketing and promotion segment soared 82.8% to 13.92 billion yen. Net sales from creative activity jumped 114.5% to 16.50 billion yen from a year earlier.

Sekisui House Ltd jumped 2.2% to 1,338.50 yen after the construction company reported net sales in the second-quarter ending in July climbed 7.7% to 910.15 billion yen from 845.25 billion yen a year ago period.

Net income in the quarter soared 23.9% to 42.18 billion yen compared to 34.04 billion yen and diluted earnings per share increased to 58.40 yen from 47.13 yen a year earlier.

Takeda Pharmaceutical Co Ltd fell 0.3% to 4,696 yen after the pharmaceutical company is ordered by the U.S. district court to pay $6 billion in punitive damages over a lawsuit filed by a man who claimed his bladder cancer was caused by Takeda’s diabetes medicine Actos.

The company said it plans to appeal the judgment.