Tokyo Stocks Rebound as World Markets Dance on Fed Anticipation

Hiruki Nakamura
25 Sep, 2015
New York City

Market averages in Tokyo closed jumped nearly 2% and Nikkei Average trimmed weekly losses to 2.1%. World financial markets remained trapped in a vicious downward spiral as the U.S. Fed keeps rate low while inflation forces in the housing and other assets become more entrenched.

[R]4:30 PM Tokyo – Market averages in Tokyo closed jumped nearly 2% and Nikkei Average trimmed weekly losses to 2.1%. World financial markets remained trapped in a vicious downward spiral as the U.S. Fed keeps rate low while inflation forces in the housing and other assets become more entrenched.[/R]

Market averages in Tokyo jumped and trimmed weekly losses as the yen gained against the euro and the U.S. dollar.

Market sentiment in Tokyo was dominated by the U.S. Fed-induced rate uncertainties and investors’ focus remain trapped in G3 currencies.

The expectation of the rate hike in the U.S. forced bond yields higher and strengthens the dollar which in turn lowers commodities prices, devalues the emerging market currencies and restrains the economic growth in the euro zone.

This vicious cycle induced by the Fed uncertainty is not likely to go away till the Fed makes the first move, which the central bank is not prepared to reveal when.

World markets are likely remain volatile at the elevated levels and emerging markets currencies are commodities are likely to remain depressed till the end of the year with the expectations of rising U.S. bond yields.

On the domestic economic front, overall consumer prices in August increased 0.2%, unchanged from previous month and core inflation fell 0.1% followed by flat in July, the Ministry of Internal Affairs and Communications said.

The producer prices index in August jumped 0.7% followed by 0.6% increase in July, the Bank of Japan said.

For the year ending in the month, prices fell 0.2% compared to the increase of 0.2% in last months to July.

The Nikkei 225 Stock Average jumped 308.68 or 1.8% to 17,880.51 and the broader Topix index advanced 26.84 or 1.9% to 1,453.81.

For the week, Nikkei 225 declined 2.1%.

The yen strengthened to 120.45 against a dollar.

Stocks in Review

Askul Corporation slipped 1.4% to 4,220 yen after the office products provider reported net sales in the first-quarter ending on August 20 soared 15.5% from a year ago to 72.79 billion yen.

Net income in the quarter surged to 1.85 billion yen compared to 182 million yen and diluted earnings per share jumped to 34.62 yen from 3.31 yen in the same period a year ago.

For the year, the company estimated net sales to slump 10% to 304.50 billion yen and net income to drop 9.1% to 4.40 billion yen.

Ichibanya Co., Ltd gained 1.9% to 5,430 yen after the curry specialty restaurants operator said net sales in the first-quarter ending in August increased 1.5% from a year ago to 11.26 billion yen.

Net income in the quarter soared 18.9% to 909 million yen compared to 764 million yen and earnings per share gained to 56.95 yen from 47.91 yen in the same period a year ago.

The curry restaurants operator forecasted net sales for the year to fall 0.3% to 43.90 billion yen and net income to jump 3.1% to 2.81 billion yen.

Nomura Holdings, Inc rose 2.7% to 728.90 yen after the brokerage group agreed to pay 59.1 billion yen or €440 million to settle a 2013 lawsuit by Italy-based Banca Monte dei Paschi di Siena SpA for massive derivatives trading losses.

Nomura plans to book loss of approx 34.5 billion yen from the settlement in the July-September quarter.

Sapporo Holdings Ltd jumped 3.6% to 465 yen and the tax authority rejected the company demand to return 11.5 billion yen in liquor tax that Sapporo paid on its Goku Zero beer-like beverage.

Toshiba Corp increased 2.7% to 316.50 yen after the industrial conglomerate plans to sell 5% stakes each in two white goods manufacturing units to China''s Skyworth Digital Holdings.

Toshiba also plans to divest its Indonesia-based washing machine unit to improve its balance sheet.