Metals, Energy Lead Rebound in Japan

123jump.com Staff
13 Aug, 2001
New York City

Sennsex rebounded after declining in the last two days of the week. The central bank added liquidity of $5 billion in the financial syste to keep the interest rate below the target rate of 0.5%. Japan second quarter economic growth rate was reported at 0.5% and current account surplus i June was recorded at 1.2 trillion yen. Falling wages kept the consumer spending weak. of the 225 stocks in the Nikkei index 111 increased and 110 fell.

[R]7:00AM New York, 8:00PM Tokyo – Market indexes in Tokyo rebounded as investors shrugged off U.S. mortgage market problems. Commodities, real estate, and financials led the rebound.[/R]

Nikkei 225 index plunged 35.96 or 0.2% to 16,800.95 at close with financial and brokerage stocks leading the decliners. Topix index dropped 1.29 to 0.1% close at 1,632.64.

The government reported economic growth in Japan in the second quarter slowed to an annualized rate of 0.5% from a revised 3.2% in the first quarter. The nominal economic growth rate was recorded at 0.3% and the measure of price changes, GDP deflator, fell 0.3% and domestic demand deflator gained 0.2%. Consumer spending continued to grow but at a slower pace of 0.4% in the second quarter. Another report showed that current account surplus rose to 1.52 trillion yen in June, 48% from a year ago. Japan is enjoying low unemployment rate of 3.7% but wages are still falling, keeping consumer spending weak.

The central bank in Japan added $5 billion of liquidity to keep interest rate below its target rate. The third injection of liquidity in as many days calmed the markets in the region. European markets also traded higher before Tokyo close. The Reserve Bank of Australia added $1.25 billion for the third day. While the amount of capital needed to maintain liquidity in the system was much lower than in the last two days of the last week.

According an analyst report cited by Nikkei News, nine largest Japanese financial groups have combined exposure to the U.S. subprime market of 1 trillion yen. The relatively light exposure in the Japanese banking system to the troubled mortgage market in the U.S. did not prevent investors selling stocks last week.

Of the 225 stocks in the index, 110 declined, 111 gained, and 4 were unchanged. Nisshinbo Industries, maker of textile products led the index stocks with a gain of 14.4% followed by rise if 11.4% in Mitsubishi Paper, 10.5% in Tokyo Dome Corporation, and 9.8% in Mitsubishi Materials. Fuji Electric, Comsys Holdings, Nippon Soda, and Hino Motors jumped 9%. Japan Tobacco, Olympus, and Nippon Express added 7%. Casio Computer led the decliners in the index with a loss of 9.4% followed by 9% loss in Nippon Meat, Odakyu Electric, and Tokyu Corp. Nitto Boseki, Toto, and Yokogawa dropped 7%.

Credit Saison dropped 5% on the news that the expenses from unpaid loans rose to 20.1 billion, up 41% from a year ago.

Energy and metal stocks rebounded from a sharp loss in Friday trading. Mitsubishi Materials surged 10%, Nippon Soda soared 8%, Nippon Oil up 4%, and Mitsui Mining & Smelting jumped 4%.