Nikkei in Tokyo Drops 1.3%

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

Tokyo stocks fell along with a decline in other Asian markets. Financial stocks led the declners after Nomura Holdings reported its first quarterly loss in four years. investors worried that the U.S. mortgage market problems are likely to persist and may be deeper than early estimates suggested. Mizuho Financial and Mitsubishi UFJ fell more than 5%. J Front reported sales and earnings rise but failed to meet the forecast. Oil closed at a record high.

[R]6:00AM New York, 7:00PM Tokyo – Financial stocks drag Tokyo index lower. J Front report lower than expected earnings.[/R]

Japan stock index traded in negative territory, sliding 1.27% as financial stocks retreated on worries of losses associated to the U.S. credit crunch.

In Tokyo trading Nikkei 225 shed 1.27% or 220.83 to 17,137.92.

Of the Nikkei 225 stocks, 28 gained, 187 declined and 10 were unchanged. J. Front Retailing led decliners, falling 9.12% after reporting operating profit below forecast, followed by Mitsubishi UFJ Financial Group, declining 6.03%. Financial stocks tumbled after losses in Nomura and U.S. bank Citigroup. Sumitomo Trust & Banking Group fell 5.11%, Mizuho Financial Group tumbled 5.11% and Resona Holdings declined 4.74%.

In the first section 8.8 billion shares valued at 1.2 trillion were traded and 306 million shares valued at 5.9 billion were traded in the second section.

Citigroup yesterday reported 57% decline in profit and losses of $3 billion in subprime mortgage related businesses. The bank also said that U.S. housing market may not recover till the next year and fourth quarter earnings for the year may be hurt.

Nomura Holdings also announced yesterday that restructuring and losses related to the U.S. subprime mortgage market will result in a pre-tax loss of between 40 billion yen and 60 billion yen for the second quarter and first half loss to 104 billion yen.

Japan’s Minister of Economy and Fiscal Policy Minister Hiroko Ota said today slowing housing starts could negatively impact in GDP, adding that the government will closely monitor if the slowdown was likely to linger on.

J Front Retailing, a merger of Daimaru Company and Matsuzakaya Holdings reported firhalf sales and earnings. The sales at Daimaru gained 2% to 409 billion yen and operating profit increased 1.3% to 14.09 billion. Net profit in the first half increased to 16% to 7.95 billion yen. At the Matsuzakaya division sales declined 0.8% to 161.50 billion yen and net income declined 13% to 2.87 billion yen.

For the full year the company expects to sell 1.04 trillion yen and estimates net profit of 22.1 billion yen with operating profit of 42.4 billion yen.

Oil prices rose 0.5% to record high of $86.54 per barrel on increased tensions between Turkey and Kurdish region in Northern Iraq. Inpex and Nippon Oil Corp rose 2.36% and 0.18% respectively.

Of the Nikkei 225 index shares, Softbank Corporation led gainers, with a rise of 2.85%, followed by gains of 2.36% in Inpex Holdings, 2.14% in Hitachi Zosen, 1.91% in JGC Corp and 1.81% in Nippon Soda Company.

Of the index stocks, J. Front Retailing led the decliners after reporting below forecast first half results, plunging 9.12%, followed by losses in Mitsubishi UFJ Financial Group of 6.03%, in Taiyo Yuden Co of 5.90% in Sumitomo Trust & Banking Group of 5.20% and Mizuho Financial Group of 5.11%.

Sony Corp fell 1.81%, while automobile companies Toyota Motor Corporation declined 0.62% and Honda Motor Corporation lost 0.51% respectively.

Japan Leisure Hotels plans to raise 100 million pounds through a public offering on AIM market listing in London. The company plans to spend 21 million pounds and acquire five hotels and operate them under the brand name Bonita.

Suzuki Motor Corp spokesman Shigeyuki Yamamura said today in an interview with Bloomberg News that the company is planning to spend 187.9 billion yen on a factory in Shizuoka prefecture and buy land and make diesel engine operated mini-cars. Land will be used for auto parts suppliers and construction of a delivery centre. Suzuki Motor Corp fell 0.29%.