Index of Services Declined in Japan

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

Nikkei 225 index declined 0.7% to close at 15,396 but broader index Topix increased 1.2% to 1,498. Demand for services declined in Japan as factory orders declined. Demand for financial, wholesale, and communication services led the decline in overall services. Yen edged lower against dollar at trades at elevated level. Rise in oil lifted energy stocks.

[R]6:00AM New York, 7:00PM Tokyo - Japan’s demand for services declined 1.6% from August.[/R]

In Tokyo trading Nikkei 225 retreated from a 0.3% gain in the morning session to shed 0.67% or 103.26 to 15,396.30, while the broader Topix Index rose 1.15% to 1,498.86.

In the first section of the Tokyo Stock Exchange 8.9 billion shares worth 1.1 trillion yen were traded and in the second section 256 million shares valued at 4.8 billion yen changed hands.

Of the Nikkei 225 shares, 97 gained, 130 declined, and 2 were unchanged. Nikko Cordial Corp led gainers, rising 7.24% after Citigroup revised the terms of the buyout deal by offering additional equity to Nikko shareholders if the stocks of the U.S. bank falls below $37 per share.

The Ministry of Economy Trade and Industry announced today that the Indices of Tertiary Industrial Activity in September fell 1.6% to a seasonally adjusted 109.4 from August, when it rose by a revised 1.2%.

According to METI sectors that contribute to the decline were wholesale and retail trade, fell 2.7%; finance and insurance declined 5.9%; information and communications lost 4.6%, services decreased 0.8%, transport climbed down 0.4%, eating, drinking places and accommodation declined 0.2%.

Medical, healthcare and welfare services index rose 2.2%, learning support increased 8.1%, electricity increased 1.5%, gas, heat supply and water utilities index added 1.5%, and in Real Estate increased 0.3%.

Kyodo news reported yesterday that the average price of regular gasoline rose to 150.1 yen per litre, record level since 1987. Nippon Oil Corp and Japan Energy Corp raised the wholesale price on petroleum products for November delivery by 6 yen per litre.

The yen against dollar traded at 111.16 from 111.18 at the close of trade and the euro changed hands at 163.34 from 163.36.

Of the Nikkei 225 index shares, Nikko Cordial Corp led the gainers with a rise of 7.24%, followed by gains in Mitsub Materials of 5.81%, in T & D Holdings of 5.28%, in Sanyo Electric of 5.23%, and in Clarion Company Limited of 5.07%.

Nikko Cordial Corp rose after Citigroup said that Nikko shareholders will receive additional equity in the event that Citigroup’s share falls below the offer price based on Citigroup stock price of $37 per share.

Commodity stocks also gained after the prices of metals. Copper futures jumped to a 16-month high with a rise of 3% and Zinc gained 1%. Sumitomo Metal Mining soared 3.03% and Nippon Mining House firmed 1.94%.

Crude oil prices firmed 3.2% to $94.09 per barrel lifting Mitsui & Company by 2.16% and Mitsubishi Corp by 0.93%.

T & D spiked after Goldman Sachs raised the rating of the stock to “buy”, with a 12-month price target of 9,230 yen.

Shimizu Corp led the decliners in the index with a loss of 6.49%, followed by losses of 4.56% in Advantest Corp, 4.24% in Minebea Company Limited, 4.05% in Pioneer Corp, and 3.88% in J Front Retailing.

Financial stocks retreated from yesterday’s gains after Mizuho first half net income dropped to 32.3 billion yen from 327.1 billion yen a year earlier. Mizuho further added that it posted a loss of about 70 billion-yen on subprime related investments. Full year fiscal 2008 forecast was cut from 750 billion yen to 650 billion yen. Mizuho Financial Group dropped 0.73%, while Mizuho Trust & Banking, which raised its full year net income forecast by 32% to 86 billion yen closed up 2.8%.

Bloomberg news reported today Mitsubishi UFJ had offered to pay 180,000 yen per share for a controlling stake in online brokerage Kabu.com Securities. Mitsubishi UFJ closed down 0.52%.

Sumitomo Trust & Banking net income fell to 37.7 billion yen in the six months to September from 64 billion yen a year earlier. Profits fell 41% on higher provisions for bad debts. Full year profit forecasts that were revised downwards from 120 billion yen to 90 billion yen were however unchanged.

TDK Corp fell 6.11% after an analyst at UBS AG cut the rating on the companies shares to “sell” from “neutral”.