Tokyo Declines with Global Markets

123jump.com Staff
29 Aug, 2007
New York City

Tokyo fell 1.7% tracking the losses in the U.S. Japanese investors are worried that banks in Tokyo have unknow exposure to mortgage market and exporters are worried that incomes will decline with slowing economy in the U.S. Banks, real estate developers, and exporters led the decline in Topix and Nikkei 225 indexes. Recently appointed finance ministe showed hawkish stand ad expressed a greater desire to intervene in the foreign currency market.

[R]7:00AM New York, 8:00PM Tokyo - Japanese stocks slide second day running following lower U.S. shares, as investor confidence hit new low. Yen continues on firm path with Finance Minister Fukushiro Nukaga planning government intervention in foreign currency market. Prices of wheat based products to rise.[/R]

Japanese stocks fell in a steep decline after a sharp sell-off in the U.S. Japan closed down 1.7% after plunging 3% in the morning trading. Exporters fell sharply on rising yen. Of the 225 Tokyo stocks, 206 dropped, 18 gained and 1 unchanged. Of the index stocks, 6 shares lost over 4% and 22 sank more than 3%, and only 13 stocks gained over 1%.

In Tokyo trading Nikkei 225 slipped 1.69% or 274.66 to 16,012.83 in a massive sell off led by exporters. At close, yen firmed to 114.49 against one American dollar from over 115 on Tuesday.

New Finance Minister Fukushiro Nukaga announced today that government will keep an eye on yen movements, and possibly intervene when needed to help economic growth. He told Japanese media today: “We must make efforts to avoid drastic changes of foreign- exchange rates to ensure that the economy maintains sustainable growth.” Previously, the Japanese central bank has intervened in the foreign exchange markets to buy US dollars to curb rising yen. Many fear that a strong yen could retard economic growth.

Japanese wheat based-products are expected to rise after government announced last week wheat sale prices for the six months from October will be raised 10%, in response to rising global wheat prices. Listed firms Nisshin Seifun Group Inc and Nippon Flour Mills Co said today they would decide on flour price hike by late September. Nisshin Seifun closed lower 1.04%.

Of the Nikkei 225 shares, exporters dropped sharply on concern a stronger yen will hurt foreign earnings. Japan Steel Work led decliners falling 4.7% followed by Ricoh Co Ltd down 4.5% while Mitsubishi Corp lost 4.3%. Mitsubishi Heavy Industries shed 4.25% while CSK Holdings finished down 4.10%. Financial shares fell on worries that there may be hidden subprime exposure. Mitsubishi UFJ Financial, Chiyoda Corp and Chiba Bank fell 3.6%, 3.34% and 2.96% respectively. Industrial stocks, Mitsubishi Industries, Yokogama Electric, Suzuki Motor, Sumitomo Electric all fell above 3%.

Yahoo Japan Corp continued racing higher pacing advancers up 4.6% after rolling out a new email service that allows consumers to send SMS from computers to cell phones. Isuzu Motors rose 4.4%. Tosoh Corp added 2.6% while Nippon Meat Pack gained 2.4% and Meiji Seika rose 2.37%. Some 5 stocks gained below 1%.

The Tokyo Stock Exchange Group Inc. announced Tuesday it had concluded an agreement with NYSE Euronext, which will advise the TSE Group on several key areas of information technology. Engineers from NYSE Euronext will provide recommendations to the TSE on various areas including network management and operation, exchange system capacity and performance management. Atsushi Saito, President & CEO, TSE Group, commented: “I am delighted that both exchanges have established further co-operative relationships. We see that, based on this agreement, receiving advice from the NYSE Euronext will enhance our system operations and benefit a variety of market participants”.