Tokyo Stocks Track U.S. Gains

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

Stocks in Japan rose after the Bank of Japan in coordination with other central banks added liquidity in the system. The new dollar liquidity is expected to unlock inter-bank lending. Nikkei 225 index rose 3.8% after U.S. markets surged in the overnight trading on the hopes that the U.S. government will purchase troubled mortgages. Banks, shipping lines, realtors and export sensitive stocks rallied. Separately, Toshiba lowered its annual sales outlook for the current fiscal year.

[R]5:00AM New York, 7:00PM Tokyo – The Bank of Japan injects 2 trillion yen in the market. Toshiba slashes full-year profit by 46.2% to 70 billion yen.[/R]

Market Sentiment

In Tokyo trading Nikkei 225 rose 3.76% or 431.56 to 11,920.86, and the broader Topix Index advanced 4.7% or 51.44 to 1,149.12, losing 2.4% for the week.

In the first section of the Tokyo Stock Exchange 26 billion shares worth 2.7 trillion yen were traded and in the second section 798 million shares value at 6.7 billion yen changed hands.

Of the Nikkei 225 stocks 175 gained, 47 lost, and 3 were unchanged. Resona Holdings led advancers in the index shares with a rise of 17.50% after central bank interventions help allay fears in the credit markets.

Bank of Japan Adds 2 trillion yen in market

The Bank of Japan stepped up efforts to provide liquidity in the money market by releasing an additional 2 trillion yen and pumped a total of 10 trillion yen this week.

The central bank will also use its $60 billion swap arrangement to supply dollars to local and foreign financial institutions as required by market conditions and will choose participants tomorrow.

Separately, the U.S. Federal Reserve, the Bank of Canada, the Bank of England, the European Central Bank ECB, the Bank of Japan, and the Swiss National Bank will roll out coordinated measures designed to address the continued elevated pressures in U.S. dollar short-term funding markets.

Federal Open Market Committee has also authorized a $180 billion expansion of its temporary reciprocal currency arrangements and the increased capacity will be available to provide dollar funding for both term and overnight liquidity operations by the other central banks.

In addition, FOMC has authorized till the end of January 2009, increases in the existing swap lines with the ECB up to $110 billion and the Swiss National Bank up to $27 billion. New facilities will support the provision of U.S. dollar liquidity in amounts of up to $60 billion by the Bank of Japan, $40 billion by the Bank of England, and $10 billion by the Bank of Canada.

Gainers & Losers

Resona Holdings led advancers in the Nikkei 225 index shares with a rise of 17.50% followed by increases in Sumitomo Osaka of 15.09%, Tokio Marine HD of 14.33%, in Sumitomo Heavy Industries of 14.29%, and Mitsui & Co. of 14.21%.

Financial stocks rose as central banks broadened measures to ease the cash squeeze on the financial markets.

Mizuho Financial increased 12.59%, Sumitomo Trust & Banking advanced 12.77%, Chiba Bank gained 11.96%, and Mitsubishi UFJ Financial Group surged 11.51%.

Shipping lines rose as the Baltic Dry Index, a gauge of commodity-shipping rates, spiked 2.1% yesterday. Kawasaki Kisen rose 10.54% and Mitsui OSK Lines edged up 10.09% as a result.

Nisshin Seifun led decliners in the Nikkei 225 index shares with a fall of 5.16% followed by losses in Ajinomoto Co. Inc of 4.21%, in Toyo Seikun of 3.96%, in UNY Co. Ltd of 3.68%, and OJI Paper of 3.31%.

Paper companies fell after oil prices soared. Nippon Paper slid 1.53% on the news.

Toshiba Slashed Annual Forecast by 46.2%

Toshiba Corp. reported on its Web site today the company expects that first half sales ending September have been revised downwards by 6.6% to 3.5 trillion yen from 3.8 trillion yen that was forecasted in April.

Also operating income in the review period has been slashed to 30 billion yen from 70 billion yen projected earlier, while net income is forecasted to drop by 50 billion yen from 15 billion yen forecasted in April.

Net income for the year has been revised downwards by 46.2% to 7.7 trillion yen from 8 trillion yen that was projected in April. Full-year net sales are expected to slump to 70 billion yen from 130 billion yen estimated earlier.

In particular, the price of the semiconductor business is expected to have a significant deficit on falling prices in NAND flash memory and weak demand for semiconductors for digital consumer products.