Ship Liners Drop, Commodities Rise

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

Stocks in Tokyo fell as traders could not shake off persistent worries related to the health of the U.S. financial companies. Lehman Brothers may be forced to sell assets and mark down financial assets of $4 billion in its upcoming earnings scheduled next week. Shippers in Asia and in Japan fell after the freight rate index fell. Slower demand in the U.S. is likely to force Toyota to lower its unit sales target to 9.5 million.

[R]5:00AM New York, 7:00PM Tokyo – Persistent worries related to the health of the U.S. banking systems dragged market averages in Tokyo. Toyota may lower fiscal 2009 unit sales target on continued weakness in the U.S.[/R]

Stocks in Japan fell marginally after a decline in shipping lines and exporters offset gains in commodities stocks.

Market Sentiment

In Tokyo trading Nikkei 225 dropped 0.1% or 13.36 to 12,851.69, and the broader Topix Index slumped 0.2% or 2.17 to 1,233.37.

In the first section of the Tokyo Stock Exchange 7.7 billion shares worth 784 billion yen were traded and in the second section 188 million shares valued at 2.4 billion yen changed hands.

Of the Nikkei 225 shares 111 rose, 106 declined, and 8 were unchanged. Kumagai Gumi Co led advancers in the index shares with a rise of 7.02% followed by GS Yuasa Corp increasing 4.58%.

Lehman Brother Likely to Writedown $4 billion in Q3

JP Morgan Chase said in a research note released yesterday that Lehman Brothers is may write down $4 billion in the third quarter as conditions as loans related to residential and commercial construction continue to fall in values. Several analysts have speculated that Lehman may sell assets to improve its cash position on the balance sheet.

However, the Wall Street Journal noted few days ago that the fourth largest broker is unlikely to sell the asset-management unit Neuberger Berman because “investors and ratings agencies will not welcome a divestiture that brings a steady cash flow, diversification and lower compensation ratio”.

Toyota to Cut Sales Target to 9.8 million Units

Bloomberg News reported on its Web site today that Tokyo Shimbun says Toyota Motor Corp. will slash its global sales target for 2009 to between 9.7 million and 9.8 million units as demand continues to slow in North America.

Earlier the carmaker lowered its 2008 sales target to 9.5 million units from the initial estimate of 9.85 million units. According to a report, the new sales target will be announced on August 28.

Gainers & Losers

Kumagai Gumi Co led advancers in the Nikkei 225 index shares with a rise of 7.02% followed by increases in GS Yuasa Corp. of 4.58%, in Sumitomo Metal Industries of 4.32%, in Mitsubishi Corp. of 4.27%, and Nippon Suisan of 4.12%.

Sumitomo Metal Industries and other commodity stocks gained after metal prices rose. Copper edged up 3.6%, gold soared 1.4% and nickel climbed 7.2%. Toho Zinc jumped 3.56% and Nippon Light Metal rallied 1.94% as a result.

Inpex Holdings increased 2.53% after the crude oil prices climbed 1.5% yesterday.

Toyota Motor Corp. led decliners in the Nikkei 225 index shares with a fall of 3.59% followed by losses in Mitsui Sumitomo of 2.99%, in Isuzu Motors of 2.84%, in Sony Corp. of 2.82%, and Taisei Corp of 2.81%.

Toyota Motor Corp fell as the company cut its sales target for 2009 to 9.8 million units.

Shipping lines declined as the Baltic Dry Index, a measure of freight rates for shipping commodities slid 1% yesterday on signs of slowing demand from China. Nippon Yusen shed 2.74% and Mitsui OSK Lines declined 2.47%.

Exporters also declined as economic conditions continue to weaken in the U.S., the countries’ largest export market. Matsushita Electric Industrial Co. plunged 2.38%, Bridgestone tumbled 2.35% and Canon shed 1.95%.

Asian Markets Review

The Nikkei 225 Index in Tokyo closed lower 13.36 or 0.10% to 12,851.69, Hang Seng index in Hong Kong increased 446.89 or 2.18% closed to 20,931.26. ASX 200 index in Australia increased 63.10 or 1.30% to close 4,929.50. The KL Composite index in Malaysia increased 3.79 or 0.35% closed to 1,073.21.

The Kospi Index in South Korea decreased 0.70 or 0.05% to close at 1,540.71, SET index in Thailand closed lower 1.28 or 0.19% to 690.05 and JSE Index in Indonesia increased 27.20 or 1.33% to 2,069.70. The Sensex index in India increased 134.50 or 0.92% closed to 14,678.23.