Toyota, Nissan Production Up; Stocks Down

123jump.com Staff
26 Jun, 2008
New York City

The Bank of Japan policy committee member cautioned that rising prices for consumers may dampen spending and shift spending pattern. The comments suggested that low interest environment in Japan may be necessary to accommodate consumers. Tokyo Electric may report larger than estimated loss in the first half as it struggles to restart recently damaged nuclear power plant. J-Power plunged after shareholders rejected dividend increase proposal from an activist shareholder TCI.

[R]5:00AM New York, 7:00PM Tokyo – The Bank of Japan concerned rising energy prices will dampen demand. J-Power shareholders defeat the TCI proposal to hike dividend, stock plunges.[/R]

Stocks in Japan traded in negative territory after trading in a tight range as oil prices dropped further exposing commodity stocks. Investors widely opted for defensive stocks such and pharmaceuticals that helped limit losses.

Market sentiment

In Tokyo trading Nikkei fell 0.05% or 7.6 at 13,822.32, and the broader Topix Index slumped 0.1% or 1.29 at 1,344.79.

In the first section of the Tokyo Stock Exchange 8.1 billion shares worth 885 billion yen were traded and in the second section 398 million shares valued at 3.2 billion yen changed hands.

Of the Nikkei 225 stocks 94 gained, 118 declined, and 13 were unchanged. Credit Saison led advancers in the index shares with a rise of 5.52% followed by Chugai Pharmaceutical Co. of 4.67%.

Consumer Spending Worries

Reuters News reported today that the Bank of Japan policy board member Seiji Nakamura said in a speech to business leaders in Asahikawa, northern Japan that that spiraling energy and raw material costs will dampen consumer spending.

Nakamura added that the uncertainty in the credit markets, with strong downside risks, is making it difficult to have a preset monetary policy.

Nakamura said, “Uncertainties are heightening further for Japan''s economy due to risks, such as overseas economic developments, inflation pressure from rising energy and raw material costs, as well as global financial market turmoil.

""""Both upside and downside risks have heightened in June compared with the time of the BOJ''s policy meeting in May,” said Nakamura.

Honda and Nissan to increase production

Toyota Motor Corp. reported in a statement today that output rose 3.2% to 723,462 units in May buoyed by production increases in China. The company’s overseas production, excluding Daihatsu Motor Corp and Hino Motors Ltd, advanced 3.6%, while domestic output gained 2.7%.

Separately, Nissan reported that production rose 5.1% to 275,918 units in May, while overseas production plummeted 8.1% on falling demand for trucks.

Gainers & Losers

Credit Saison Co. led advancers in the Nikkei 225 index shares with a rise of 5.52% followed by rises in Chugai Pharmaceutical Co. of 4.67%, in Furukawa Electric of 4.05%, in Yahoo Japan Corp. of 3.82%, and Nippon Telegraph of 3.64%.

Chugai pharmaceutical gained as investors seek to hedge against volatile trading, especially in commodities. Astellas pharmacies increased 2%.

Nippon Telegraph increased after UBS AG raised its price target by 16% to 632,000 yen

GS Yuasa Corp led decliners in the Nikkei 225 index shares with a fall of 8.02% followed by losses in Fuji Electric House of 6.46%, in Dowa Holdings Co. of 4.60%, in Showa Denko KK of 4.30%, and Tosoh Corp of 4.16%.

Commodity stocks declined as crude oil fell by $2.45 to $134.55 a barrel yesterday. Nippon Oil Corp slumped 3.11% and Mitsui & Co shed 2.11% as a result.

Asian Markets Review

In Tokyo Nikkei 225 Index closed lower 7.60 or 0.05% to 13,822.32, in Hong Kong Hang Seng index decreased 179.49 or 0.79% closed to 22,455.67. In Australia ASX 200 index higher 69.20 or 1.32% to close 5,307.00. In Malaysia KL Composite index decreased 5.22 or 0.43% closed to 1,203.89.

In South Korea Kospi Index decreased 0.13 or 0.01% to close at 1,717.66, in Thailand SET index closed lower 4.03 or 0.52% to 774.39 and Indonesia JSE Index edged increased 9.53 or 0.41% to 2,350.89. Sensex index in India increased 201.75 or 1.42% to 14,421.82.