Political Turmoil in Tokyo, Lower Stocks

123jump.com Staff
13 Sep, 2007
New York City

Stocks in Tokyo fell on rising oil and worries that Japanese economy may slowdown. Nikkei 225 index edged up 0.2% but broader index Topix fell 0.4%. Pharmaceuticals jumped after the local newspapers suggested that companies are likely to spend 300 billion yen to buyback stocks. Trading company Mitsui and oil company Inpex jumped more than 3%. Five-year Japanese government note declined on lower demand.

[R]7:00AM New York, 8:00PM Tokyo - Japanese stocks rebound from Wednesday’s slump led by commodities and pharmaceuticals stocks on record oil price. Japans five-year government note plummeted.[/R]

Japanese stocks rebounded led by commodity stocks as oil price soared to record highs at $80 per barrel. Pharmaceuticals stocks also rallied as Japan closed up 0.2%. Of the 225 Nikkei index stocks,109 gained, 105 declined, while 11 traded unchanged. Engineering firms and technology stocks fell sharply on rising steel prices and falling demand. Of the index stocks, ten closed more than 3%. 13 slipped more than 2%.

In Tokyo trading the Nikkei 225 edged up 0.15%, or 23.59 to 15,821.19. Investors opted for the attractive stock in oil and drug manufacturing companies, shunning buying debt as yields on the Japanese five-year government notes slipped. The notes fell as yields reach their lowest since March 2006. Ten-year bond futures for December delivery fell 0.14 to 136.19. Bonds surged on Wednesday after the resignation of Prime Minister Shinzo Abe stocked expectations that the Bank of Japan will keep interest rates on hold next week. Bank of Japan’s base rate at 0.5% is the lowest among industrialized countries.

Japanese Ministry of Finance revealed today that the Japanese investors’ bond purchases rose to a two-year high. Weekly bond sale increased by 1,391.5 billion-yen than during the week ended September 8th. Higher yen is likely to draw investors into international mutual funds to channel investment into overseas assets.

Of the index shares, diversified pharmaceuticals and construction company paced gainers, climbing 4.29%, followed by Nippon Mining House at 4.20%. Dainippon Sumitomo Pharmaceuticals added 4.11%, while Eisai Co and Kyowa Hakko Kog swelled 3.72% and 3.66% respectively.

Engineering and construction firms led the decliners shedding 5.46% and 4.80% respectively. Toshiba Corporation slipped 3.86% on news of sluggish demand of PCs and a 11% shrink in the price of flash memory chips. Advantest Corp and Canon anchored the top five losers dropping 3.86% and 3.74 respectively.

It is forecasted that pharmaceuticals companies will continue on the upside after predictions that Japan’s four largest drug-makers will probably spend more on share buy-backs this year.

Takeda pharmaceuticals rose 1.92% after it was projected that the drug maker will increase expenditure on share buy backs to132.5 billion yen by the end of the year.