Orix, Credit Saison Merger; Tokyo Stocks Fall

123jump.com Staff
05 Aug, 2008
New York City

Stocks in Japan edged lower as futures of crude oil and base metal prices declined. Paper, rubber and transportation companies rose but stocks of commodities trading and refining companies fell. In merger news, Orix and Credit Saison are exploring merger to form the largest non-bank financial company in Japan with asset of 11 trillion yen. Steel companies stocks fell on the worries that demand may decline in the second half of the year.

[R]5:00AM New York, 7:00PM Tokyo - Falling crude oil and metal prices buoys stocks.[/R]

Stocks in Japan oscillated between gains and losses and closed lower as falling commodities prices offset gains in rubber and paper companies.

Market Sentiment

In Tokyo trading Nikkei 225 declined 0.14% or 18.52 to 12,194.66, and the broader Topix Index was flat at 1,247.71.

In the first section of the Tokyo Stock Exchange 10 billion shares worth 1.1 trillion yen were traded and in the second section 186 million shares valued at 3.4 billion yen changed hands.

Of the Nikkei 225 stocks 101 rose, 118 declined, and 6 were unchanged. Nippon Paper Group led advancers in the index shares with a rise of 12.87% after crude oil prices for September delivery dropped 3% to $121.41 yesterday on news that Tropical Storm Edouard will miss most of the offshore production facilities in the U.S. Gulf Coast.

Crude oil prices have fallen back below $120 a barrel in New York after reaching as high as $147 a barrel in May. Traders expect in the short term crude oil price to fall below $95 but may spike back if demand remains high and geopolitical tensions rise anew.



U.S. Consumer Inflation Increases 0.8% in June

The U.S. Commerce Department reported yesterday that consumer inflation advanced 0.8% in June as the economic woes of the world’s largest economy continue to deepen.

The prices paid by consumer increased 4.1% from a year ago in June compared with 3.5% increased in May. Core inflation, excluding food and fuel, gained 0.3% in June from May beating the expectations of 0.2% increase.

However the report showed that consumer spending rose more than forecasted by 0.6% in June. The stimulus of $160 billion from one-time reimbursement of income tax increased spending only marginally.

Orix and Credit Saison to Merge

Nikkei News reported today that Orix Corp and Credit Saison are currently negotiating to merge by autumn 2009 to form the largest non-bank financial company in Japan with assets worth 11.5 trillion yen.

Gainers & Losers

Nippon Paper Group led advancers in the Nikkei 225 index shares with a rise of 12.87% followed by rises in Fujikura Ltd of 11.75%, in Credit Saison Co. of 11.22%, in Furukawa Co Ltd of 6.59%, and Nippon Soda Co of 5.70%.

Nippon Paper Group and other paper companies gained after the crude oil prices for September delivery edged down 3% to $121.41. Hokuetsu Paper increased 5% and OJI Paper gained 4.35%.

Rubber companies fell on expectations that falling crude oil prices will relieve pressure on margins. Bridgestone shed 3.50% and Yokohama Rubber slipped 3.21%.

Ebara Corp led decliners in the Nikkei 225 index shares with a fall of 16.83% followed by losses in Nippon Suisan of 16.44%, in Chiyoda Corp. of 8.20%, in Fast Retailing of 7.75%, and Yamaha Corp. of 7.31%.

Commodity stocks fell as metal prices declined. Copper prices plummeted 4.3% to $3.426 a pound. Sumitomo Metal Mining slumped 3.68% and Sumitomo Metal Industries plunged 4.74% as a result.

Steelmakers also fell after a Taipei-based paper Commercial Times said demand for steel will tumble as the economy slows. Nippon Steel declined 4.88% and JFE Holdings dropped 7.19%.

Isuzu Profit Falls 16.4%

Isuzu Motors Ltd reported on its Web site today that net profit in the first quarter ended June 30 declined 16.4% to 17.69 billion yen from a year ago as prices of raw materials steel and fuel rose.

Asian Markets Review

The Nikkei 225 Index in Tokyo closed lower 18.52 or 01.14% to 12,914.66, Hang Seng index in Hong Kong decreased 565.17 or 2.51% closed to 21,949.75. ASX 200 index in Australia decreased 67.30 or 1.38% to close 4,820.40. The KL Composite index in Malaysia decreased 19.82 or 1.73% closed to 1,128.86.

The Kospi Index in South Korea decreased 7.51 or 0.49% to close at 1,535.54, SET index in Thailand closed lower 7.55 or 1.12% to 667.12 and JSE Index in Indonesia decreased 42.06 or 1.89% to 2,185.62. The Sensex index in India increased 383.20 or 2.63% to 14,961.07.