Tokyo Slumps, Tenth Decline in a Row

123jump.com Staff
02 Jul, 2008
New York City

Stocks in Japan are now in the longest losing streak in the last four decades. The bench market index Nikkei 225 has lost ground for the last trading days in a row. Continued worries related to the health of the U.S. and European banks and a sharp rise in crude oil prices and a fall in auto sales in the U.S., Japan and India dragged auto stocks lower. A 2.5% decline in Baltic Dry Index that tracks ocean freight rates dragged shipping companies lower. Toyota, Honda, Nissan and Suzuki fell.

[R]5:00AM New York, 7:00PM – The benchmark index Nikkei 225 is in the longest losing streak in 43 years. Asian automakers outsell three leading domestic automakers in the U.S. Baltic Dry Index falls.[/R]

Japan market averages fell for the tenth consecutive day extending its longest losing streak to the most since February 1965 according to the data published by Nikkei News.

Automakers fell on continued slowing demand in the U.S. and signs of weakening demand in India.

Market sentiment

In Tokyo trading Nikkei 225 lost 1.31% or 176.83 at 13,286.37, and the broader Topix Index fell 1.4% or 18.92 at 1,301.15.

In the first section of the Tokyo Stock Exchange 9.5 billion shares worth 1.1 trillion yen were traded and in the second section 210 million shares valued at 3.1 billion yen changed hands.

Of the Nikkei 225 stocks 29 rose, 189 declined, and 7 were unchanged. Sumitomo Metal Industries led advancers in the index shares with a rise of 3.41% on the continued increase in metal prices.

U.S. June Auto Sales Decline

The Japan Automobile Dealers Association reported yesterday that new car sales in Japan dropped 2% in the first half of this year for the third consecutive year on longer replacement cycle and soaring gas prices. Petrol in Japan averaged $6.50 a gallon, one of the highest prices in the world. Domestic mini-car sales also fell 3.8%.

Statistics from the association also indicated that Asian carmakers outsold the domestic makers in June in the U.S.

U.S auto sales in June fell annualized 18% from a year ago.

Honda sales jumped 1.1% to 142,539 cars and light trucks buoyed by sales of Accord and Civic, which rose 37% and 9.5% respectively.

However, Toyota car sales fell 21% to 193,234 units from 245,739 units in the same month a year earlier as sales of the Prius model declined 34% on limited supplies of batteries and other parts. In addition sales of the company’s Tundra model slumped 53%.

Nissan sales declined 18% to 75,847 driven mainly by falling demand for large fuel consuming models such as the Titan large pickup and the Pathfinder SUV that shed 71% and 72% respectively.

US vehicle sales for Mazda Motor Corp. also declined 7.7% to 23,771.

William Mumma to be Head of US Brokerage Unit

The Nikkei News reported on its Web site today that William Mumma will assume the post of chief operating officer at Mitsubishi UFJ Securities (USA) Inc. this month and will subsequently become chief executive next year.

Formerly, Mumma was the global head of derivatives trading at Bankers Trust till 1996 before becoming the head of equity at Nomura Holdings Inc’s U.S. subsidiary.

Gainers & Losers

Sumitomo Metal Industries led advancers in the Nikkei 225 index shares with a rise of 3.41% followed by rises in Tokyo Dome Corp of 2.76%, in Pioneer Corp. of 2.42%, in NTT DoCoMo of 1.90%, and Fujitsu of 1.77%.

Commodity stocks increased after crude oil for August delivery advanced 1.1% to $142.45 a barrel.

Suzuki led decliners in the Nikkei 225 index shares with a fall of 7.14% followed by losses in OKI Electric Industries of 6.13%, in Kajima Corp. of 4.89%, in Hino Motors Ltd of 4.83%, and GS Yuasa Corp. of 4.80%.

Suzuki fell on news that sales at Maruti Suzuki India Ltd. eased to 2.2% in June compared to a gain of 16% in May. Other automakers dropped as car sales in the U.S. slowed. Isuzu shed 4.13%, Honda slid 1.1% and Toyota declined 1.40%.

Shipping lines declined after the Baltic Dry Index edged down 2.2% yesterday on speculation of slackening demand of iron ore from China. Nippon Yusen plunged 4.6%, Mitsui Engineering & Shipbuilding slumped 4.5% and Mitsui OSK Lines plummeted 3.8%.

Exporters fell as well as the dollar fell below 106 yen. Canon dropped 2.62% and Nikon Corp tumbled 1.61%.

Showa Shell Invests in Solar Panel Plant

Nikkei News reported today that Showa Shell Sekiyu KK will spend over 100 billion yen to build one of the largest solar panel plants in the world with an annual capacity of about 1,000 MW.