Japan Worries Sudden Rise in Yen

123jump.com Staff
04 Mar, 2008
New York City

Stocks in Japan closed unchaged after volatile trading. Yen rose against dollar as oil, commodities, and precious and base metals rallied. Economic and Fiscal Policy Minister Ota that a sudden rise in yen will lower corporate profits. Worldwide declared lossed related to subprime loans are now estimated at $200 billion.

[R]5:00AM New York, 7:00PM Tokyo – Yen strengthened to a 3-year high on rising worries related to the U.S. economic health.[/R]

Stocks in Japan ended flat in predominantly volatile trading in which rising commodity prices and a strengthening yen that continues to affect exporters largely impacted on a directionless market.

Market Sentiment

In Tokyo trading Nikkei 225 pared a 0.4% decline by midday to end flat at 12, 992.28, and the broader Topix Index dropped 0.4% or 6.08 to 1,265.07.

In the first section of the Tokyo Stock Exchange 9.5 billion shares worth 1 trillion yen were changed and in the second section 232 million shares valued at 3.8 billion yen changed hands.

Of the Nikkei 225 stocks 83 rose, 130 declined and 12 were unchanged. Pioneer Corp. led advancers in the Nikkei 225 index shares with a rise of 11.70% on Nikkei reports that the company will exit from producing flat panels.

Ota raises concern on strengthening yen

Bloomberg news reported today that Economic and Fiscal Policy Minister Hiroko Ota said in an interview in Tokyo today that the sudden rise in the value of the yen will have a negative effect on corporate profits. A large percentage of Japan’s export is destined to America. The yen continued to rise against the dollar strengthening to 102.62 yesterday.

In addition, Ota said the continued rise in oil prices and raw materials will affect consumer spending.

Subprime losses top $200 billion

The Nikkei news online reported today that a top official in the U.S. Treasury Department said that subprime losses from around the globe have topped $200 billion so far this year.

Separately, Sanford C. Bernstein & Co. cut its profit estimates for brokerages Bear Stearns Co, Lehman Brothers, Morgan Stanley and Goldman Sachs.

Gainers & Losers

Pioneer Corp. led advancers in the Nikkei 225 index shares with a rise of 11.70% followed by gains in Sanyo Electric of 6.05%, in Dentsu Industries of 5.29%, in OKI Electric Industries of 5.28%, and in Sumitomo Metal Mining of 4.56%.

Pioneer Corp. rose on Nikkei reports that the company will stop producing flat panels on rising competition and concentrate on fabrication of televisions. The company is due to announce its reorganisation plan on March 7.

Commodity stocks gained trekking the increase in oil and commodity prices. Copper for three months future delivery rose 0.1% to $8,581 a ton yesterday.

Crude oil rose $103.95 per barrel as the dollar slumped and ahead of OPEC meeting tomorrow to the lowest since the introduction of the euro at $1.5275.

Mitsubishi Corp. advanced 3.26% on the news.

Showa Shell led decliners in the Nikkei 225 index shares with a fall of 6.33% followed by losses in Mitsubishi UFJ N of 5.59%, in Mirui Group of 5.20%, in Sumitomo Realty of 4.87%, and Sekisui House of 4.85%.

Financial stocks also fell as well on the rising fears of widening credit market losses. Resona Holdings shed 4.12% and Mizuho Financial Group fell 1.89%.

Exporters fell after the yen rose 0.70% from 103.39 to 103.38 against the dollar at the close of trade today. Mazda Motor Corporation declined 1.47% and Bridgestone Corp slipped 2.51%.

Cerberus to raise stake in Aozora

U.S. leverage buyout company Cerberus LP offered to shore up its stake in Aozora Bank Ltd from 37% to 45%. The company’s offer at 325 yen per share was at an 18% premium to yesterday’s closing price.