Nikkei Drops 1.3% on Weak Industrial Production, Housing Starts Fall

Hiruki Nakamura
31 Aug, 2015
New York City

Nikkei average in Tokyo closed down following weak economic data. Industrial production in July declined unexpectedly by 0.6% and housing starts in the month plunged 7.4%. Auto production in the month decreased 5.9%.

[R]4:30 PM Tokyo – Nikkei average in Tokyo closed down following weak economic data. Industrial production in July declined unexpectedly by 0.6% and housing starts in the month plunged 7.4%. Auto production in the month decreased 5.9%.[/R]

Market indexes in Tokyo declined after industrial production fell unexpectedly in July, automobile production fell and housing starts annual pace plunged.

Industrial production in July unexpectedly dropped 0.6% followed by 1.1% increase in June, the Ministry of Economy, Trade and Industry reported.

The ministry said based on surveys, output in August is estimated to increase 2.8% from July but growth is expected to decrease to 1.7% in September.

Housing starts in July plunged 7.4% compared to 16.3% jump in the previous month and the annual starts rate dropped to 914,000 from 1.03 million a month ago, the Ministry of Land, Infrastructure, Transport and Tourism said.

Automobile production in July declined 5.9% to 841,812 units from 894,846 units in a year ago month, the Japan Automobile Manufacturers Association said today.

The association said domestic sales in July plunged 7.6% to 425,093 units compared to a year ago month but export to the United States soared 13.2% while export to rest of Asia declined 10.6%.

Motorcycle production tumbled 18.3% to 40,795 units and sales in domestic market dropped 2.8% while exports plummeted 23.4%.

The Nikkei 225 Stock Average slumped 245.84 or 1.3% to 18,890.48 and the broader Topix index decreased 12.75 to 1,537.05.

For the month, Nikkei 225 plunged 8.3% and for the three-months to August, Nikkei 225 declined 8.2% but for the year, surged 22.5%.

The yen strengthened to 121.20 against a dollar.

Stocks in Review

Mitsubishi Corporation slumped 1.8% to 2,255 yen after the trading company signed an agreement with Indian Farmers Fertiliser Cooperative Ltd for the distribution of agrochemicals with an estimated sale of 350 billion yen in fiscal year 2017.

Suzuki Motor Corp fell 0.5% to 4,129.50 yen and the international arbitration tribunal settled the four-year failed partnership dispute between the company and Volkswagen.

Panel ordered Volkswagen to sell its 19.9% stake in Suzuki Motor valued about 463 billion yen or $3.8 billion.

Sharp Corporation declined 3.3% to 177 yen and the electronics products maker is considering various options including the sale of its majority stake in the struggling liquid crystal display business to Taiwan-based Hon Hai Precision Industry Co. or to the rival Japan Display Inc. as a potential buyers.

In July, Sharp said operating loss in the June quarter in the LCD operation was about 13.7 billion mainly due to weak sales in China.