Weak Earnings, Rising Unemployment

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

Stocks in Japan fell sharply after June unemployment rose to 4.1% and retail sales in the month edged up only 0.3%. The weak employment and retail sales data dragged market averages lower. In addition, Sony first quarter net income fell 47% to 35 billion yen and Kansai Electric estimated full-year loss of 55 billion yen. Nomura Holdings in the first quarter lost 76.6 billion yen after it set aside 63.1 billion yen.

[R]5:00AM New York, 7:00PM Tokyo - Japan’s June unemployment rate increases 4.1% and retail sales rise 0.3%. Sony profit in the first quarter fell 47%. Kansai Electric estimated full-year loss.[/R]

Stocks in Japan fell on a raft of negative data that showed the country’s unemployment rate rose more than forecasted and mounting fears that the lingering credit market crisis will continue to haunt financial institutions.

Market Sentiment

In Tokyo trading Nikkei 225 declined 1.46% or 194.33 at 13,159.45, and the broader Topix Index dropped 1.5% or 19.15 at 1,281.64.

In the first section of the Tokyo Stock Exchange 7.9 billion shares valued at 867 billion yen were traded and in the second section 134 million shares worth 2.1 billion yen changed hands.

Of the Nikkei 225 stocks 35 rose, 185 declined, and 5 were unchanged. Sumitomo Corp led advancers in the index shares with a rise of 3.47% followed by Toagosei Corp of 2.70%.

June Unemployment Rises

The Statistics Bureau reported on its Web site today that the number of employed persons dropped by 0.6% or 0.4 million to 64.51 million from the previous year in June 2008, while the number of unemployed persons rose by 10% or 0.24 million to 2.65 million from a year ago in the same month.

The total labor force declined 0.3% from the previous year at 67.16 million.

The unemployment rate stood at a seasonally adjusted rate of 4.1%, higher than 4% projected by economists.

Also the Labor Ministry reported today that the ratio of positions available to each applicant declined to 0.91% in June, which is the lowest since February 2005.

Separately, the bureau reported in its Family Income and Expenditure Survey that the average amount of monthly consumption expenditures for two-or-more person household rose 0.5% in nominal terms and declined 1.8% in real terms from the previous year at 281,951 yen in June 2008.

The amount spent on food fell 0.1% and 3.6% in nominal and real terms respectively from the previous year at 66,918 yen, while housing expenditure slid 3.6% and 4.1% correspondingly from the previous year at 17,265 yen.

For fuel, light and water charges, the amount spent spiked 6.2% in nominal terms but declined 0.6% in real terms from a year earlier at 19,863 yen and expenditure on furniture and household goods rose 7.7% and 8.1% in nominal and real terms in that order to 10,915 yen.

Clothing and footwear expenditures fell 13.4% and 13.8% in nominal terms and real terms in that order from the previous year at 11,894 yen and transport and communications increased 9% in nominal terms and 4.5% in real terms to 38,051 yen.

According to the survey for worker’s households, the average amount of income per household rose 0.2% in nominal terms and plummeted 2.1% in real terms from a year ago to 737,166 yen. The average amount of consumption expenditures advanced 2.6% and 0.3% in nominal and real terms respectively at 307,975 yen.

On the overall, the disposable income fell 2.1% in nominal terms and 4.3% in real terms at 594,393 yen.

Retail Sales Rise 0.3% in June

The Ministry of Economy Trade and Industry in its monthly survey of commerce noted that retail sales edged up 0.3% at 10.9 trillion yen, while commercial sales advanced 4.1% at 53.1 trillion yen in June.

Wholesale sales increased 5.1% at 42.1 trillion yen and large-scale retail stores dropped 2.1% at 1.6 trillion yen in the month under review.

Gainers & Losers

Sumitomo Corp led advancers in the Nikkei 225 index shares with a rise of 3.47% followed by increases in Toagosei Co Ltd of 2.70%, in Mitsubishi Corp of 2.23%, in Inpex Holdings of 2.05%, and Sapporo Holdings of 1.66%.

Commodity stocks rose after crude oil and metal prices increased.

Fuji Electric House led decliners in the Nikkei 225 index shares with a fall of 9.12% followed by losses in Matsushita Electric Work of 6.83%, in Hino Motors of 5.69%, in Tokyu Land Corp of 5.18%, and Taisei Corp of 4.96%.

Fuji Electric and other utility stocks fell after Kansai Electric estimated full year loss of 55 billion yen.

Sony Profit Falls 47%

Sony Corp reported today that net income in the first quarter ended June fell 47% to 35 billion yen from 66.5 billion yen a year earlier on a rising yen and increased competition.

Analysts had forecasted that profit will rise to 59 billion yen. For the quarter, sales rose 0.1% to 1.98 trillion yen.

Asian Markets Review

The Nikkei 225 Index in Tokyo closed lower 194.33 or 1.46% to 13,159.45, Hang Seng index in Hong Kong decreased 429.21 or 1.89% closed to 22,258.00. ASX 200 index in Australia decreased 74.70 or 1.52% to close 4,847.40. The KL Composite index in Malaysia decreased 3.29 or 0.29% closed to 1,150.80.

The Kospi Index in South Korea decreased 31.09 or 1.95% to close at 1,567.20, SET index in Thailand closed lower 8.80 or 1.28% to 676.73 and JSE Index in Indonesia increased 3.01 or 0.13% to 2,278.68. The Sensex index in India decreased 557.57 or 3.89% to 13,791.54.