Retailers Drag Japanese Stocks Lower

123jump.com Staff
04 Oct, 2007
New York City

A weakness in retailers, techology, and energy stocks draggged Japan lower after a steady rise in the last three days. Lower than expected earnings from Seven & I retailer hurt the sentiment in the sector. Tech stocks fell as well on the weakness in chipmakers. However, Elpida jumped on the news that it will sell more chips directly to customers at higher prices. Declining oil price hurt energy trading companies. Mitsubishi Corp, Mistui & Company, and Inpex declined.

[R]6:00AM New York, 7:00PM Tokyo - Profit taking weighs Japan down 0.62%. Energy technology stocks and retailers retreat.[/R]

Japan stock index traded in negative territory on profit taking from investors as the stock market peaked to an eight week high in the past three days.

In Tokyo trading Nikkei 225 fell 0.62% or 107.4 to 17,092.49. Of the Nikkei 225 stocks 65 rose, 153 declined and 7 traded unchanged. 56 stocks lost 1%. In the index stocks, Itochu Corporation led decliners, slipping 5.44%, followed by Sapparo Holdings, which shed 5.22%.

Oil fell below $80 per barrel after an unexpected increase in U.S. inventories. Crude oil was trading at $71.96 per barrel in Tokyo. Energy stocks fell as a result. Mitsubishi Corp declined 3.59%, Mitsui & Co fell 3.64%, and Inpex Holdings lost 0.84%

Deputy Governor of the Bank of Japan Kazumasa Iwata told business leaders in Shimonoseki, South West Japan today a recession in the U.S. and economic slowdown in the Euro zone would impact negatively on Japan’s economic growth. Iwata also added that a fall in Japanese stocks and gains in the yen would have the same adverse effect. Iwata was the only member to vote for a rate hike in the last meeting and majority of the economists are of the opinion that interest rate will not be raised in Japan in the next meeting on October 11th.

NTT DoCoMo, Japan’s biggest mobile company, and KDDI are expected to trim mobile phone charges by 30%. The two firms are leading mobile telephone service provider in Japan.

The yen traded at 116.54 from 116.57 against the dollar and was quoted at 164.3 from 164.34 to one euro at the close of trade.

Of the Nikkei 225 index shares, Fuji Electric Holdings led the gainers with a rise of 6.23%, followed by increases of 5.72% in Yahoo Japan Corporation, 5.31% in IHI Corporation, 2.95% in Fast Retailing and 2.74% in Tokyo Dome.

Itochu Corporation led decliners with a slump of 5.40%, followed by losses in Sapparo Holdings of 5.22%, in Aeon Company Limited of 4.59% in Mitsubishi UFJ Nicos of 4% and Mitsui & Company of 3.64%.

Retailers also fell on waning investor confidence. Aeon Company Limited tumbled 4.59% to 1,623 yen, Takashimaya Company Limited shed 2.29%, while Seven & I Holdings slipped 3.31% on Nikkei Newspaper reports the company is likely to report operating profit below the estimate for the first half. The report said that operating profit is likely to be at 145 billion yen for the six months to August 31, up 2% from a year ago but below the forecasted 148 billion yen.

Izumiya Company reported first half net income of 910 million yen, a decline of 40% from a year ago. The supermarket chain fell 6.3% to 644 on the news.

The sell-off of technology stocks in the U.S. semiconductor companies including Intel Corp, Nvidia, and Advanced Micro Devices, coupled by 77% decline in prices of memory chips on the spot market also affected Japanese technology stocks. Advantest lost 0.81% and Toshiba slumped 1.74%.

Elpida Memory said that it plans to lower the chips it sells in auctioned market and sell more directly to customers. Elpida jumped 7% to 4,180 on the news bucking the decline in the chip sector trading today.

Sony plunged 2.37% after news the company will be selling some of its product lines at its chip factories in Kyushu to cut its investment in semiconductor business from 150 billion yen to 130 billion yen.