Commodities, Stocks Fall in Tokyo

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

Stocks in Japan tracked losses in commodities prices and fell 1.75%. A two-day sharp fall in crude oil prices dragged oil prices down nearly 10%. Inpex Holdings led decliners in the Nikkei 225 index shares with a fall of 6.7% followed by losses in Toho Zinc of 6.2%, in Takashimaya of 6%, in Nippon Sheet Glass of 5.9%, and GS Yuasa Corp. of 5.2%. Japan is increasingly likely to head for a national election as voters demand a change and faster political actions.

[R]5:00AM New York, 7:00PM Tokyo- Falling crude oil prices affect Tokyo. Taro Aso expresses intention to run for LDP presidency but national election in a short term are more likely.[/R]

Stocks in Japan plunged after commodity stocks plummeted as crude oil prices slumped the most in five months after concerns on supply disruptions from the Gulf of Mexico eased as Gustav made a landfall as a weaker-than-forecasted storm. The oil installations in the Gulf of Mexico are estimated to suffer between $1 billion and $3 billion in damages, much less than $10 billion during Hurricane Katrina in 2005.

The slow moving Hurricane Gustav can still do significant damage as it heads to the Eastern Texas region.

Market Sentiment

In Tokyo trading Nikkei 225 fell 1.75% or 224.71 to 12,609.47, and the broader Topix Index slid 1.5% or 18.27 to 1,212.37.

In the first section of the Tokyo Stock Exchange 7.1 billion shares worth 715 billion yen were traded and in the second section 234 million shares valued at 1.8 billion yen changed hands.

Of the Nikkei 225 stocks 31 rose, 187 declined, and 7 were unchanged. T&D Holdings led advancers in the index shares with a rise of 2.86% followed by Kajima Corp. gaining 2.73%.

Japan in Talks with Middle East Funds

Bloomberg News reported on its Website today that an official with the Ministry of Industry Trade and Economy said Japan is in talks with sovereign wealth funds in the Middle East to raise 100 billion yen to shore up foreign investment.

METI will seek legislative approval to manage the funds in the next two fiscal years for the year starting April and will also decide on how the fund will be administered

Also the ministry will form a commission, which will hold its first meeting tomorrow, made up of 20 funds that include Carlyle Group and KKR & Co. to identify investment opportunities in Japan for the fund. The commission is scheduled to hold the first meeting on September 3 in Tokyo.

The Cabinet Office statistics estimated foreign direct investment in Japan of 3% of gross domestic product at the end of 2007.

Fukuda Resignation Compromises Economic Policy

Prime Minister Yasuo Fukuda resignation yesterday will effectively shift focus from fiscal responsibility to government spending to attract voters. The uncertainty in the LDP party politics may force earlier than expected national election and LDP may lose majority in Diet. Fukuda resigned yesterday on a political gridlock and plummeting approval ratings.

Liberal Democratic Party Secretary General Taro Aso, who is tipped to replace him, today expressed his intention to run for party presidency. Aso may not able to gain consensus with the Democratic Party, in opposition and break the current political deadlock for economic reform. If early elections are called in Japan, the LDP led government is likely to lose its majority in Diet.
Gainers & Losers

T&D Holdings led advancers in the Nikkei 225 index shares with a rise of 2.86% followed by rises in Kajima Corp. of 2.73%, in JFE Holdings of 2.18%, in J Front Retailing of 2.06%, and Ricoh Co. Ltd of 1.98%.

Steelmakers and retailers rose as the fall in crude oil prices raised expectations that pressure of corporate margins will wane. Nippon Steel climbed 0.58% and Fast Retailing edged up 0.55%.

Rubber makers rose as well. Bridgestone increased 1.65% and Yokohama Rubber soared 0.36%.

Inpex Holdings led decliners in the Nikkei 225 index shares with a fall of 6.65% followed by losses in Toho Zinc of 6.21%, in Takashimaya of 5.90%, in Nippon Sheet Glass of 5.86%, and GS Yuasa Corp. of 5.17%.

Inpex fell after crude oil prices dropped 3.8% to 111.22 a barrel after weakening Hurricane Gustav made a landfall in Louisiana and much of the oil installations in the Gulf of Mexico avoided damage. Mitsui & Co. shed 5.14%, Nippon Oil Corp. lost 4.48% and Mitsubishi Corp. declined 4.07%.

Other commodity stocks also fell. Nippon Mining House dipped 5.10% and Nippon Light Metal tumbled 4.38%.