Tokyo Business Confidence Plummets

123jump.com Staff
06 Nov, 2007
New York City

Tokyo stocks edged lower at close, bucking the regiona trend of rising stocks. Nikkei 225 index fell 0.12% to 16,249.63. An index of leadin economic indicators fell to 0%, reflecting a recessionary sentiment among business professionals. The Coincidence Index fell to 66.7% and Lagging Index dropped to 25%. The Ministry of Finance revised its wheat an barley budget by 23% to cover the shortfall on rising prices. Japan Airlines revised its outlook for the fiscal 2008.

[R]6:00AM New York, 7:00PM Tokyo - Tokyo closed 0.12% lower on sell off of high-tech stocks. Japan’s Leading Index for outlook of business conditions slumps to a decade low.[/R]

Japan’s stock index retreated from a 0.4% gain in the morning session to close 0.12% down on sell-off in tech stocks.

In Tokyo trading Nikkei 225 slid 0.12% or 19.29 to 16,249.63, the lowest since September 18, while the broader Topix Index fell 0.03% to 1,574.59.

In the first section of Tokyo Stock Exchange 9.6 billion shares worth 1.2 trillion yen were traded and in the second section 338 million shares valued 6.4 billion yen changed hands.

Of the Nikkei 2225 stocks, 106 rose, 112 declined, and 7 traded unchanged. Of the index stocks, 16 shares lost 2%. Fujikura Limited led decliners, plunging 13.60%, followed by Softbank Corp fell 6.54%.

Cabinet Office reported today in its report Indexes of Business Conditions for September that the Leading Index, which is a key gauge for outlook of the economy, plunged to a decade low at 0% in September from 27.3% in August. The index is a collective measure of leading indicators including new job offers, stock prices, and housing starts.

The Coincident Index plummeted to 66.7% from 85.0% Lagging Index fell to 25.0% from 40% in that order.

The statistics for the index of inventory ratio to final finished goods, producer goods for the mining and manufacturing sector and total floor area of housing construction starts were negative. In addition, the consumer confidence index remained negative.

According to the Cabinet Office, the index of industrial production for mining and manufacturing and producers shipments was positive in September, while for Tertiary Industrial Activity, which measures business services, was unchanged in the month under review. Furthermore, business expenditure on plant and equipment was unchanged and unemployment was negative.

Bloomberg news reported today the Ministry of Finance said it has boosted wheat and barley import budget by 23% or 55 billion yen to 298 billion yen for the fiscal year 2008 ending in March. The increase reflects record jumps in the grains prices. The government spent 203 billion in the fiscal 2007.

Wheat prices have risen 58% this year as bad weather affected output in producing countries, lowering global stockpiles to decline to a 32-year low.

The yen traded firmer against the dollar at 114.64 from 114.67 and 166.52 from 166.54 against the euro.

Of the Nikkei index stocks, Toppan Printing led the gainers with a rise of 9.15%, followed by rises in Clarion Company Limited of 8.38%, in GS Yuasa Corp of 7.85%, in Furukawa Company Limited of 4.71% and Yokogawa Electric of 4.10%.

Financial stocks also gained, buoyed by consumer lenders after Goldman Sachs raised the rating of Acom from “sell” to “buy” and Takefuji to “buy” from “neural”. Last week, Nikkei News reported that consumer lenders might report profits for the first time in eighteen months in the first half of the year. Mitsubishi UFJ Financial Group, which holds 13% equity in Acom, rose 0.29%. Mizuho Financial Group also firmed 0.34%.

Fujikura Limited led decliners, falling 13.60%, followed by losses of 6.54% in Softbank Corporation, 4.14% in Daiichi Sankyo, 3.28% in Honda Motor Corporation and 3.18% in Chugai Pharmaceutical.

Chugai Pharmaceutical slumped after it reported that it would slash in half the winter supply of Tamiflu in Japan to meet demand for six million people.

Japan Airlines today raised its profits for the fiscal year 2008 ending in March by 37% to 48 billion yen compared to 35 billion yen, projected earlier. It maintained net income forecast at 11.5 billion yen. Net income for the quarter ended September fell 59% to 11.6 billion yen. The company is expected to save 50 billion yen this year through a staff reduction.

JAL is also under investigation by the anti trust division of the U.S. Department of Justice and European Union Commission for anti-competitive practices in the cargo industry.