Japan's Annual Trade Deficit Shrank In October, Yen Resumed Downward Slide

Akira Ito
20 Nov, 2024
Tokyo

Stock market indexes in Tokyo advanced, and the yen resumed its downward slide amid the rate path and ongoing worries of impending trade tariffs. 

The Nikkei 225 stock average and the Topix index turned lower after struggling to stay above the flatline in the early morning trading. 

Market indexes are facing headwinds over the last three weeks as the Bank of Japan signals a gradual increase in interest rates and ends a decade of unconventional interest rate policy. 

Market jitters were compounded by the ongoing political instability after the ruling coalition of LDP-Komeito parties lost its majority in the lower house of Diet, complicating policy priorities. 

So far in the year to Tuesday, the Nikkei 225 stock average has gained 14.9%, and the benchmark index has advanced for the second consecutive year in a row, largely driven by foreign fund inflow in the hopes of corporate reforms. 

Market sentiment has been cautious amid a sharp escalation of tensions between the U.S. and Russia after Ukraine launched American-made missiles striking towns near the border with Russia. 

Following the strike, Russia's president Vladimir Putin lowered the threshold for a retaliatory nuclear strike, sharply escalating tensions in the region. 

The yen resumed its slide and eased to 155.28 after investors overlooked the latest verbal intervention by officials at the ministry of finance. 

Currency traders are looking for the yen to trade as low as 165 against the U.S. dollar by the end of the current fiscal year. 

 

Japan's Trade Deficit Shrank in October 

Japan's international trade balance recorded its fourth consecutive deficit as imports continue to surpass exports, the Ministry of Finance said on Wednesday. 

Japan's exports in October increased 3.1% from a year ago to a three-month high of 9.4 trillion yen; imports advanced 0.4% to 9.88 trillion yen. 

Sales of semiconductor machinery soared 42.6%, and scientific and optical instruments advanced 11.8%; however, shipments of transportation equipment fell 4.4%. 

Shipments to the U.S. declined 6.2%, to the European Union dropped 11.3%, but exports advanced to China by 1.5%, to India by 18.9%, to Russia by 52.8%, and to the ASEAN region by 7.5%. 

Imports advanced for the seventh month in a row but rose at the slowest pace. 

Imports of machinery rose 12.5%, chemical by 5.6%, but purchases of mineral fuels fell 11.5% from a year ago, respectively. 

Trade deficit shrank to 461.25 billion yen from 702.8 billion yen a year ago, as exports rose faster than imports, but deficit expanded from 294.1 billion yen in September. 

 

Japan Stock Movers 

The Nikkei 225 Stock Average decreased 0.3% to 38,328.03, and the broader Topix index declined 0.3% to 38,328.03. 

Seven & I Holdings increased 6.6% to ¥2,596.0 on reports that the founding family is looking to raise 8 trillion yen and take the retailer private by the end of this financial year in March. 

Tokio Marine dropped 6.9% to ¥5,636.0 despite the insurance company raising its full-year net income outlook and announcing a stock buyback of up to 120 billion yen. 

Net premiums written in the first half increased 5.7% from a year ago, reflecting higher rates; however, life insurance premiums plunged 32.9%. 

Revenue in the first-half ending in September increased 16% to 4.34 trillion yen, net income attributable to shareholders soared 235% to 688.5 billion yen, and basic net income per share advanced to 351.38 yen from 103.38 yen a year earlier.

The company declared 81 yen per share earnings and forecast a total dividend of 162 yen per share in the current year, higher than 123 yen per share. 

The company revised consolidated business forecasts and ordinary profit of 1,240.0 billion yen and 880.0 billion yen for net income attributable to owners of the parent. 

The company projected full-year net premiums of 5.08 trillion yen and life insurance premiums of 890 billion yen. 

The insurance company forecast net incurred losses related to natural catastrophes occurring during the period of 116 billion yen in Japan and 85 billion yen outside Japan.

SOMPO Holdings increased 11.8% to ¥3,984.0 after the insurance company reported strong financial performance in the first half, driven by higher premiums and investment gains. 

Ordinary income increased 11.4% to 2.96 trillion yen from 2.65 trillion yen, and the insurance company estimated annual net income to decline. 

Net premiums written increased by 8.3% to 2.26 billion yen, and investment income soared 51% to 386.76 billion yen, largely attributed to gains on sales of securities. 

Basic earnings per share increased to 267.05 yen from 132.21 yen a year earlier.

Meanwhile, the net income attributable to shareholders almost doubled to 262.23 billion yen from 131.5 billion yen.

The company forecast net income attributable to shareholders in the current year to decline 3.9% to 400 billion yen and earnings per share of 412.27 yen.