Interest Rate Talk Clouds Tokyo Stocks

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

Stocks in Japan and Asia fell on a lowered earnings expectations at four largest U.S. banks and talks of a hike interest rate in Japan dominated the news. In Tokyo trading Nikkei 225 fell 0.8% or 102.05 to 12,604.58, and the broader Topix Index declined 0.9% or 11.11 to 1,226.44. The Bank of Japan board member in a speech suggested that rate should be lifted to cover easy credit conditions. Mitsui will take 20% in a joint venture with Qatar to develop a city project for $3.9.

[R]5:00AM New York, 7:00 PM Tokyo – Credit market fears and talks of revised rates in Japan kept stocks in check.[/R]

Stocks in Japan plummeted on resurgent fears of credit market losses after Oppenheimer slashed its earnings outlook for four largest U.S. banks and on a strengthening yen.

Market Sentiment

In Tokyo trading Nikkei 225 fell 0.8% or 102.05 to 12,604.58, and the broader Topix Index declined 0.9% or 11.11 to 1,226.44.

In the first section of the Tokyo Stock Exchange 7.3 billion shares worth 840 billion yen were traded and in the second section 135 million shares valued at 2.4 billion yen changed hands.

Of the Nikkei 225 index shares 83 rose, 125 declined and 15 were unchanged. TDK Corp. led decliners in the Nikkei 225 index shares with a drop of 7.51% on Nikkei news reports that operating profit for the year through March will fall to 86 billion yen from an earlier forecast of 90 billion yen.

U.S. durable goods orders decline 1.7% in February

The U.S. Census Bureau reported on its web site yesterday that new orders on manufactured goods in February fell for the second straight month by 1.7% or $3.6 billion to $210.6 billion.

Excluding transportation, new orders declined 2.6%. The report also noted that shipments of manufactured durable goods slumped 2.8% or $6 billion to $215 billion in February.

Oppeinheimer cuts profit forecasts for U.S. banks

Reuters news reported yesterday that Oppenheimer & Co. analyst Meredith Whitney slashed the earnings outlook for four largest U.S. banks - Citigroup, JP Morgan Chase & Co., Bank of America Corp. and Wachovia Corp.

According to Oppeinheimer, Citigroup Inc might lose $1.15 per share in the first quarter from an earlier forecast of 28 cents per share loss. Also the bank is forecasted to lose 15 cents per share in 2008 from an earlier projection of 75 cents per share.

Citigroup’s writedowns in the first quarter are expected to increase by $13.12 billion of write-downs in the first quarter in addition to $18.1 billion of write-downs and costs tied to subprime mortgages in the fourth quarter.

The bank’s first-quarter write-downs may include $9 billion for CDOs, $1.97 billion for commercial mortgage securities, and $2.15 billion for leveraged loans used to fund corporate buyouts.

The analyst also cut Bank of America’s profit per share forecasts for this year from $3.65 to $3.25, JP Morgan to $2.70 from $3.05 and for Wachovia Corp. from $3.05 to $2.70.

The report also noted, """"As key mark-to-market indices trend lower, the housing market worsens, and the U.S. consumer comes under increasing pressure, we anticipate further downside to both estimates and stock prices.""""

Suda says BoJ may consider raising interest rates

Kyodo news online reported today that Bank of Japan Policy Board member Miyako Suda said in a speech in Miyazaki, southern Japan, that the central bank should continue with its bias toward raising interest rates considering the “extremely loose” credit conditions.

Gainers & Losers

Clarion Co. Ltd. led advancers in the Nikkei 225 index shares with a rise of 4.07% followed by increases in Daiichi Sankyo of 3.97%, in Odakyu Electric Railway Co. Ltd. of 3.92%, in Inpex Holdings of 3.67%, and Nippon Yusen of 3.65%.

TDK led decliners in the Nikkei 225 index shares with a fall of 7.51% followed by losses of Mazda Motor Co. of 5.57%, in Denki Kagaku of 5.45%, in Chiyoda Corp. of 5.32%, and Ajinomoto Co. Inc of 4.84%.

TDK Corp. fell after the Nikkei news said today that the company’s operating profit might decline to 86 billion yen from 90 billion yen than had earlier been forecasted.

The company expected the yen to trade near 110 yen against the dollar in January and March, while independent forecasts expect it to be about 105 yen.

Exporters also declined after the yen fell from 99.20 yesterday to 99.18 against the dollar. Sony Corp. fell 3.78% and Toshiba Corp shed 3.01%.

Mitsui & Co to take 20% equity in Qatar project

Mitsui & Co. Ltd announced yesterday that it has entered into a joint venture agreement with Qatar Petroleum, Qatar Electricity and Water Company and Suez in regard to establishing a project company a power generation and desalination project in Qatar''s Ras Laffan Industrial City.

The total project cost is approximately $3.9 billion.

Mitsubishi UFJ and Mitsubishi Corp. to set up 100 billion yen buyout fund

The Nikkei news reported today that Mitsubishi UFJ Financial Group and Mitsubishi Corp. will set up a 100 billion yen buyout fund next month to acquire shares in publicly traded Japanese companies with favorable business models and technology.

Mitsubishi UFJ and Mitsubishi Corp. will contribute 49.5% each, while 1% will be taken by a joint venture of the two companies.