Japan Rebounds 2% in Nervous Trading

123jump.com Staff
23 Jan, 2008
New York City

Stocks in Japan recovered on the back of large rate cut in the U.S. The emergency rate cut of 0.75% by the Federal Reserve in the U.S. helped Asian markets to rally in the hope the U.S. action may smoothen the slowing economy. However European investors remained unconvinced and markets in Europe decline by the mid-afternoon. Hong Kong, Japan, India, and Singapore surged on the rate cut.

[R]5:00AM New York, 7:00PM Tokyo - Financial stocks, shipping lines and carmakers lift Tokyo up 2.04%.[/R]

Stocks in Tokyo recovered from their worst two-day decline in more than a decade buoyed by emergency rate cut in the U.S.

In Tokyo trading Nikkei 225 rose 2.04% or 256.01 to 12,829.06, while the broader Topix soared 29.98 to 1,249.93. Both benchmarks tumbled 5.7% yesterday and lost more than 10% in a two-day sell-off.

In the first section of the Tokyo Stock Exchange 10.3 billion shares worth 1.1 trillion yen were traded and in the second section 527 million shares worth 6 billion yen changed hands.

Of the Nikkei 225 stocks 187 gained, 30 declined, and 7 were unchanged. Bridgestone led gainers with a rise of 8.07% followed by Mitsubishi Corp rising 6.90% on rising metal prices.

The U.S. Federal Reserve cut the benchmark interest rate to 3.5% from 4.25% at an unscheduled meeting yesterday. The emergency rate cut of 0.75% was done in response to the slowing economy and global stock market plunge for two days ending on Tuesday.

It was the first time since 2001 the monetary authorities reduced the interest rate at an unscheduled meeting. The Federal Reserve was scheduled to meet on January 29-30.

Bloomberg news reported today that Obic net income in the nine months to December 31 rose to 8.5 billion yen, while sales jumped 6.5% to 35 billion yen on strong sales of accounting systems that accompanied the change of Japanese standards for booking depreciation and leases.

Of the Nikkei 225 index stocks, Bridgestone Corporation led advancers with a rise of 8.07% followed by rises in Mitsubishi Corp of 6.90%, in Fuji Electric House of 6.78%, in Marubeni Corp of 6.61%, and in Sumitomo Corp of 6.47%.

Mitsubishi Corp rose as metal prices gained. Copper gained 2.2% and zinc climbed 3.6%.

Other commodity stocks gained as well. Nippon Mining House increased 5.42% and Sumitomo Metal Industries soared 2.07%.

Shipping lines also gained on expectations that the aggressive emergency rate cut by the U.S. Federal Reserve will lead to a soft landing of the economy. Mitsui O.S.K. Lines gained 5.66%, Kawasaki Kisen rose 6.17% and Mitsui Engineering & Shipbuilding advanced 4.19%.

Toyota Motor Corporation surged 6.03% and Honda Motor Company increased 3.26%.

Casio Computer led decliners in Nikkei 225 index shares with a drop of 4.72% followed by losses in Clarion Company Limited of 4.10%, in KDDI Corporation of 2.92%, in Secom Company Limited of 2.81%, and in Sony Corporation of 2.74%.

Casio and other exporters fell after the yen strengthened from 106.41 to 106.43 against the dollar.

Takeda Pharmaceutical rose the most in five years after Citigroup raised its recommendation of the stock to “buy” on expectations that earnings will rise in the short to medium term.

The pharmaceutical company is currently seeking regulatory approval from the U.S. Food and Drug Administration on two development drugs with initial trial data are expected in May and June 2008.

Takeda is seeking a drug to replace Actos, which generated 2.86 billion yen in the year ended March 31, 2007. The stock closed up 6.33%.

Nikkei news online reported today that Nippon Yusen and Mitsui O.S.K. Lines will transform their crude oil tankers into iron ore carriers in preparation of a planned implementation of an international ban in using single-hull containers in transporting oil. Nippon Yusen rose 3.99% and Mitsui O.S.K. Lines surged 5.66%