Tokyo Stocks Declined 2.5%, Yen at 11-year High

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

Tokyo stocks fell sharply on the worries related to sub-prime losses and rising yen. Nikkei 225 index fell 2.5% to 15,197, fifteen month low. Forty stocks in the index lost more than 3%. Yen rose to a 11-year high against dollar. Exporters and automotive stocks fell. According to the latest consumer survey, outlook for the consumer spending declined in October. The Bank of Japan cosumer and corporate goods price index increased in October.

[R]12:00PM New York, 11:00PM Tokyo - Tokyo stocks plummeted 2.50% on stronger yen and sub-prime losses. Wholesale inflation increased 2.4% in Japan. Current account surplus rises 40.4% to 2.883 trillion yen.[/R]

Japan stocks averages opened the week sharply lower on rising yen and as losses associated to sub-prime mortgage crisis haunted financial stocks and sparked a sell off.

In Tokyo trading Nikkei 225 plunged 2.48% or 386.33 to 15,197.09, the lowest in fifteen months, while the broader average Topix Index declined 2.54% to 1,456.

In the first section of the Tokyo Stock Exchange 9.8 billion shares worth 1.2 trillion were traded and in the second section 403 million shares valued at 6.1 billion yen changed hands.

Of the Nikkei 225 stocks 15 gained, 208 slumped, and 2 were unchanged. Of the index stocks, 40 lost more than 3%. Dowa Holdings led decliners after the non-ferrous metal processor lowered its profit forecast last week and brokerage Nomura cut the rating on the stock from “buy” to “neutral”.

Bank of Japan announced today in its monthly report on the Corporate Goods Price Index that the Domestic Corporate Goods Price Index rose for the 44th month in a row to 2.4% in October from a year ago. However, the producer price index rose 0.3% from a month ago. In September the rate had increased by 1.7%. The Import Price Index also rose 7.5%, but on a month on month basis it rose 3.4%, while the Export Price Index dropped 0.1%.

Of the Domestic Corporate Goods Price Index, textile products rose 1.4% from the previous and 3.1% from a year earlier, lumber and woods products fell 0.1% from a year earlier. Petroleum and coal products firmed 3.8% from a month earlier and 11.1% a year ago, while metal products climbed 0.3% for the month and 3.4% on a yearly basis.

The Cabinet Office reported today in the monthly Consumer Confidence Survey consumer confidence fell to a 3- year low in October to 42.8 points from 44.1 in September owing to dropping wages, a weakening job market and rising oil prices.

According to the Survey, the overall livelihood and income growth slipped from 42.2 points to 41.0 points in October and unchanged at 42.2 points respectively. A measure of employment in the survey plunged from 46.4 points to 45.3 points. Furthermore the willingness to buy durable goods fell to 42.8 points from 45.5 points, painting a gloomy outlook.

Equally, a measure of expectations on wages fell 0.2% as the jobless rate fell to 4% in September from 3.6% in August.

The Ministry of Finance announced today that Japan’s current account surplus soared for the ninth month by 40.4% in September from a year earlier to 2.883 trillion yen before seasonal adjustment. In August the surplus increased by 42.1%. Economists had forecasted a gain to 2.66 trillion yen.

The Finance Ministry also added that surplus for the April to September fiscal half expanded 34.1% on year to 12.424 trillion yen, the fourth fiscal half of growth buoyed by growing automobile exports to Europe and Asia.

Of the Nikkei 225 index shares, Dowa Holdings paced advancers with a rise of 13.52%, followed by gains of 8.17% in TDK Corp, 6.93% in Chiyoda Corp, 6,86% in Furukawa Electric Company, and 6.18% Bridgestone Corp.

Financial stocks declined as more U.S banks announced negative profit outlooks in the wake of the U.S. housing slump. Wachovia announced it might have lost $1.7 billion, while Bank of America and JP Morgan Chase & Co announced fourth quarter results might be affected by the credit crunch. The Daily Telegraph, London based newspaper, also reported that Europe’s HSBC Holdings would announce $1 billion in writedowns tied to subprime losses.

Also in the region, China increased reserves by 0.5% to 13.5% of deposits to prevent the economy from overheating. Mitsubishi UFJ Financial Group fell 1.85%, Mizuho Financial Group plunged 2.45%, and Sumitomo Mitsui Financial Group dropped 2.13%.

Exporters continued on the downtrend as the yen rose to an 18-month high against the dollar at 110.45 from 110.47, while it was quoted at 161.58 from 161.60 against the euro. Canon Incorporated climbed down 2.69%, Sony Corp shed 2.62% and Toyota Motor Corporation fell 2.76%.

Dai Nippon Printing Company led rising index shares, gaining 5.30% followed by rises in Secom Company Limited to 3.27%, in Denki Kagaku of 2.78%, in Sapporo Holdings of 1.91% and in Clarion Company Limited of 1.52%.

Dai Nippon Printing Company Limited gained on strong earnings performance after the company announced net income increase to 21.8 billion yen against 21.5 billion yen estimate.

Brewer Sapporo Holdings gained on Kyodo reports the Brewer Association of Japan reported yesterday shipments of beer and fermented beverages rose 0.8% to 39.32 million cases in October on price promotions.

Isuzu Motors, 5.9% owned by Toyota Motor Corp reported today first half net income fell to 37 billion yen from 55.4 billion a year ago. Operating profit fell 16% to 48.3 billion yen. Sales rose 6% to 874.5 billion yen spurred by sales in South East Asia and the Middle East.

Full year net income forecast for the company was unchanged at 80 billion yen, while full year sales projections were raised to 1.75 trillion yen. Isuzu Motors closed 4.04% down.