January Deficit in Japan Rises

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

January trade deficit in Japan rose to 79.3 billion yen from 3.5 billion yen in January 2007. Rising crude oil prices lifted oil import by 41% and overall imports by 9%. The seasonality in the Japan business cycles and holidays often leads a deficit in January month in international trade. While trade surplus with the U.S. declined 4.8%, trade deficit with China declined 5.8% from a year ago.

[R]5:00AM New York, 7:00AM Tokyo – January trade deficit in Japan was 79.3 billion yen, first monthly deficit in 12 months.[/R]

Japan reported first monthly deficit in in the last twelve months as exports to the U.S. declined. Commodities and energy related stocks rose after another rise in metals and crude oil prices.

Market Sentiment

In Tokyo trading Nikkei 225 rose 2.84% or 377.91 to 13,668.28, and the broader Topix Index gained 2.5% or 32.00 to 1,334.72.

In the first section of the Tokyo Stock Exchange 9 billion shares valued at 1 trillion yen were traded and in the second section 423 million shares worth 3.6 billion yen changed hands.

Of the Nikkei 225 index shares Sumitomo Metal Mining led advancers in the Nikkei 225 index shares with a rise of 15.32% after gold prices climbed to $924.60 per troy ounce in Europe trading and $935.70 per troy ounce in New York.

UBS raised its rating on the stock to “buy” from “nuetral”.

Trade Deficit Widens

Japan’s Ministry of Finance revealed today in preliminary trade statistics published on its website that exports rose 7.7% in January from 6.9% in the previous month.

Imports for the month rose 9% widening the trade deficit to 79.3 billion yen from 3.5 billion yen from a year ago.

Mainichi news online reported today that the January deficit is the first monthly deficit in a year and worst than the 5.6 billion yen forecated by economists polled by Dow Jones and Nikkei.

Exports to Asia increased 8.2% to 3.04 trillion yen, while shipments to Europe jmped 10.6% to 993.1 billion yen. Japan''s trade surplus with the U.S. declined 4.8% to 540.7 billion yen, fifth monthly decline in a row.

Trade surplus with Asian countries, including China, spiked 76.2% to 293.6 billion yen, but the trade deficit with China eased 5.8% from a year ago to 348 billion yen.

Yen Weakens

The yen weakened from 108.00 at the close of trade yesterday to 108.20 today.

Gainers & Losers

Sumitomo Metal Mining led gainers in the Nikkei 225 index shares with a rise of 15.32% followed by rises in Toho Zinc Co. Ltd of 14.96%, in Mitsumi Electric Co of 9.25%, in Okuma Corp of 8.40%, in Matsushita Electric Industries of 8.08%.

Sumitomo Metal Mining advanced after gold prices increased to $924.60 a troy ounce and rose to $935.70 in New York.

Brokerage UBS also raised its rating on the stock to “buy” from “nuetral”.

Metal prices rose on U.S. reports that consumer inflation unexpectedly gained to 0.4%. In addition, core inflation, excluding volatile food and energy, rose to 0.3% in January.

Other commodity stocks gained as well. Sumitomo Metal Industries edged up 3.29%, Nippon Mining House jumped 5.70% and Nippon Steel jumped 3.37%.

Exporters advanced as the yen weakened against the U.S. dollar. Canon Inc. gained 3.31%, Casio Computer rose 4.83% and Komatsu advanced 3.95%.

Energy stocks rallied as the Nymex March West Texas Intermediate hit a record $101.32 a barrel before retreating but closing just above $100 a barrel. Inpex Holdings and Nippon Oil Corp rose 2.70% and 3.99% correspondingly.

Bridgestone Corp. led decliners in the Nikkei 225 index shares with a drop of 1.14% followed by losses in Nissan Motor Corp of 0.72%, in Nippon Telegraph of 0.62%, in Asahi Glass Co of 0.42%, in Nikon Corp. of 0.17%.

Company News

The Mainichi news online reported today that General Electric said in a regulatory filing with the U.S. Securities and Exchanges Commission it expects to complete the sale of its Japanese consumer financing unit at the end of the third quarter.

GE recorded a $908 million loss in connection with the sale of GE Consumer Finance unit.

The company concluded the sale of its U.S. mortgage business in December last year for $117 million on the mounting losses in the subprime mortgage lending.

Shinsei Bank to merge with Ikeda

Bloomberg news reported today that Shinsei Bank Limited had preliminary talks with Bank of Ikeda Limited to merge businesses and create a bank with 4 trillion yen of deposits.

The baking unit of Mitsubishi UFJ owns 68% of Shinsei Bank.