Japan Stocks Suffer from the U.S. Links

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

Japanese financial markets have not been able to shake off the volatility emanating from the U.S. markets. The continuted worries related to the U.S. sub-prime losses and ongoing correction in the U.S. housing market have global markets on the edge. Third quarter U.S. home prices fell 4.5% sparking a new round of worries related to the health of the U.S. banks. Nikkei 225 index closed 0.5% lower to 15,153.78 in volatile trading.

[R]4:00AM New York, 6:00PM Tokyo - October retail sales in Japan increased 0.8%.[/R]

Stocks in Japan fell on the U.S. sub-prime losses maintained their grip on the market. In Tokyo trading Nikkei 225 slid 0.45% or 69.07 to 15,153.78, while the broader Topix index fell 3.14% to 1,475.64.

In the first section of the Tokyo Stock Exchange 9.5 billion shares worth 1.1 trillion yen were traded and in the second section 534 million shares worth 9.0 billion yen changed hands.

Of the Nikkei 225 stocks 87 gained, 132 declined and 6 were unchanged. Of the index stocks 26 lost 2% or more.

Mitsui O.S.K. Lines led decliners in the index with a fall of 4.67%, followed by losses of 4.61% in Nikon Corp, 4.42% in Toyota Tsusho, 4.41% in Kumagai Gumi Company, and 4.24% in Inpex Holdings.

Shipping lines fell as Goldman, Sachs & Co. cut its rating on metal producers from “attractive” to “neutral” on projected fall in demand for raw materials caused by a slowdown in the U.S. Kawasaki Heavy Industries fell 2.27% as a result.

Oil prices for January delivery fell 3.4% to $94.42 a barrel and Mitsubishi Corp fell 2.35%.

U.S. mortgage lender Wells Fargo & Co. reported a $1.4 billion pretax charge related to increased losses on sub-prime loans as the housing market continues to sour. Mitsubishi UFJ Financial Group declined 1.55%, Mizuho Financial Group slumped 1.76% and Sumitomo Mitsui Financial Group retreated 2.44% on the news.

Separately, the private economic consulting company Conference Board announced yesterday that the consumer confidence index fell to a two-year low to 87.3 in November on rising fuel costs and falling home prices.

S&P/Case-Shiller Home Price Index also showed yesterday that third quarter home prices declined 4.5% from a year earlier. Exporter fell on the news. Komatsu declined 2.87%, Toyota Motor Corporation slipped 1.64%, and Honda Motor Corporation fell 1.37%.

Hitachi Zosen led the advancers in the Nikkei 225 index with a rise of 3.97%, followed by gains in Shin-Etsu Chemicals of 3.88%, in Mitsubishi Rayon Company of 3.40%, in Sumitomo Chemical Company of 3.36%, and in Sony Corporation of 3.30%.

Japan’s Ministry of Economy Trade and Industry reported today in its preliminary report on Current Survey of Commerce that retail sales increased in the fastest pace in more than two years by 0.8% to 11.0 trillion yen in October. Analysts had forecasted a 0.7% gain. Commercial sales firmed 4.3% to 51.3 trillion yen compared to a 1.1% rise or 51.8 trillion in September.

Wholesale sales accelerated by 5.3% to 40.3 trillion yen in November compared to 1.2% or 41.0 trillion yen realised in October, while large-scale retail stores sales fell 0.2% to 1.7 trillion yen in November.

METI also added that fuel sales climbed 2.3%, automobile sales rose 2.5%, while sales of clothing retreated 1.3% as mild weather negatively affected jackets and sweaters.

The Cabinet Office reported yesterday in a monthly economic report that while the economy is recovering corporate profits and business investment have been weak.

However, it observed that improvement in employment markets appear to be on hold and Japan economy may be vulnerable to rising to oil prices and volatility in the global financial markets.

Bloomberg news reported today that Nomura Holdings’ unit Nomura Principal Finance Company has bid 300 billion-yen for ailing Ashikaga Bank, which is currently under state control. Ashikaga Bank reported recently that it has 284 billion yen more debts than assets.

Norinchukin Bank, a credit lender for Japanese farmers and fishermen, said yesterday it had unrealized losses of 53.3 billion yen on 476.7 billion yen of sub-prime related assets in the six months ending in September 07.