Tokyo Rebounds 4% on Higher Growth

123jump.com Staff
14 Feb, 2008
New York City

Stocks in Japan rebounded after the economic growth in the fourth quarter exceeded expectations and better than expected January retail sales in the U.S. In Tokyo trading Nikkei 225 rose 4.3% 13,626.45, and the broader Topix Index increased 3.7%. Markets across Asia jumped between 2% and 5%. Economic growth in Japan accelerated to 0.9% in the fourth quarter from 0.8% in the third quarter despite a weak performance in construction industry.

[R]5:00AM New York, 7:00PM Tokyo - Japan’s fourth quarter economic growth increases to 0.9% from 0.8% in the third quarter.[/R]

Stocks in Japan rebounded after the economic growth in the fourth quarter exceeded expectations and better than expected January retail sales in the U.S. Earnings from Nippon Sheet Glass also helped market sentiment.

Market Sentiment

In Tokyo trading Nikkei 225 rose 4.27% or 558.15 to 13,626.45, and the broader Topix Index increased 3.7% or 47.09 to 1,332.44.

In the first section of the Tokyo Stock Exchange 9.1 billion shares worth 1.05 trillion yen were traded and in the second section 278 million shares valued at 314 billion yen changed hands.

Of the Nikkei 225 stocks 222 gained and 1 declined. Sumco Corp. led gainers with a rise of 13.98% followed by Taiheiyo Cement increasing 12.92%.

Fourth Quarter GDP Rises

The Cabinet Office reported today in the preliminary figures for fourth quarter GDP growth that the country’s gross domestic product increased to 0.9% from 0.8% in the third quarter.

In real terms, the domestic market contributed 0.5%, while exports contributed 0.4% and in nominal terms the domestic market contributed 0.2% and net exports added 0.5%.

According to the Cabinet Office, private consumption rose to 0.2% from 0.1% in the previous quarter in real terms and advanced 0.4% from zero growth in nominal terms in the third quarter. Household consumption also rose by the same figures both in real and nominal terms.

Fourth quarter private residential investment declined in real terms to 9% from 8.3% decline in the earlier quarter. Similarly, in nominal terms investment in the sector fell to 9.3% from a decline of 8.2%.

Conversely, non-residential real investment rose to 2.9% in the fourth quarter from 1.1% in the third quarter, while it jumped in nominal terms to 2.7% from 1.3% from the previous quarter.

Public demand also rose as well in the three months to December from 0.1% to 0.8% in real terms and gained 0.3% from 0.2% in nominal terms.

Furthermore, declines in public investment slowed to a loss of 0.7% from a fall of 1.9% in the quarter earlier period in real terms. In nominal terms, it also narrowed to a loss of 0.4% from a loss of 1.6%.

Exports in the fourth quarter were unchanged at 2.9% in real terms, but fell marginally to 1.7% from 2% a quarter ago in nominal terms.

Imports increased to 0.5% in real terms from a decline of 0.1% in the previous quarter and gained 3.5% from 0.1% in the previous quarter in nominal terms.

U.S. Retail Sales Unexpectedly Rise

The U.S. Commerce Department reported yesterday that retail sales rose 0.3% in January. Economists were expecting a fractional decline. Higher sales of gasoline, apparel, and automobiles lifted retail sales. Economists are still expecting retail sales to decline in 2008 as consumers battle rising food and energy prices, stagnant wages, falling home values, and tight credit markets.

Construction Machinery Set to Increase

Japan’s Construction Equipment Manufacturers Association shipments of excavators, tractors, cranes and other construction machinery may rise to 2.6 trillion yen in the fiscal year beginning in April. In the fiscal 2007, the industry recorded a sale of 2.35 billion yen and exported 66% of its production.

The Chairman of the association, Hiroo Shimada said in a message for the New Year and published on the association’s website, “Demand in North America alone decreased by almost 20% over the previous year, affected by a reduction in housing starts. On the other hand, demand in China increased by 40%; the markets in India, the Middle & Near East and Russia also expanded; and demand in Europe steadily increased. The world market, as a whole, grew substantially.


Yen Gains

The yen gained 1.03% to 108.29 from 108.32 against the dollar.

Gainers and Losers

Sumco Corp. led gainers in the Nikkei 225 index stocks with a rise of 13.98% followed by gains in Taiheiyo Cement of 12.92%, in Nippon Sheet Glass of 11.83%, in Advantest Corp. of 11.61%, and in Pioneer Corp. of 10.60%.

Advantest Corp rose after Applied Computers projected higher demand in the next quarter.

Nippon Sheet Glass advanced after income in the nine months ended December 31st increased from 28.2 billion yen to 60.8 billion yen driven mainly by increased sales in Europe as the sales from Pilkington Plc were added to the company sales. Sales in the same period edged up 34% to 648.7 billion yen from a year ago.

Sky Perfect JSAT led decliners in the Nikkei 225 index shares with a drop of 2.27% followed by a loss in Shiseido Co. Limited of 1.83%.

International Markets

In Tokyo Nikkei 225 Index closed higher 558.15 or 4.27% to 13,626.45, in Hong Kong Hang Seng index increased 852.13 or 3.68% closed to 24,021.68. Australia ASX 200 index increased 142.70 or 2.57% to close 5,684.80.

In South Korea Kospi Index increased 65.67 or 4.02% to close at 1,697.45, in Thailand SET index closed higher 2.70 or 0.33% to 832.11 and Indonesia JSE Index increased 64.86 or 2.48% to 2,675.65. Sensex index in India increased 817.50 or 4.82% to 17,766.63.