Japan Stocks Down 8%, Weak Autos

123jump.com Staff
03 Oct, 2008
New York City

The Bank of Japan added 800 billion yen in the money market to facilitate intebank lending. However stocks in Japan fell nearly 2% and for the week declined more than 8%. Auto and construction machinery makers and oil refiners dropped. Toyota and Honda dropped more than 5%, Nissan declined 7%.

[R]5:00AM New York, 7:00PM Tokyo – The Bank of Japan pumps 800 billion yen in market. Mitsubishi UFJ and Morgan Stanley may merge Japanese brokerage units. Automakers stocks plunge on weak U.S. sales.[/R]

Japan stock indexes traded in negative territory on general market weaknesses sparked by fears that the global economy will not be able to avoid a recession. A sharp decline in auto sales in the U.S. worried the investors.

Market Sentiment

In Tokyo trading Nikkei 225 fell 1.94% or 216.62 to 10,938.14, and the broader Topix Index slipped 2.7% or 29 to 1,047.97.

In the first section of the Tokyo Stock Exchange 23 billion shares worth 2.3 trillion yen were traded and in the second section 926 million shares worth 4.5 billion yen changed hands.

Of the Nikkei 225 index stocks, 40 rose, 183 declined, and 2 were unchanged. Fast Retailing led advancers in the index with a rise of 13.6% after reporting that sales at its 672 Uniqlo stores in Japan soared 21% from a year ago.

Bank of Japan Injects 800 billion yen Money Markets

The Bank of Japan today injected 800 billion yen into the money market as part of open market operations that are meant to put the lid on soaring interest rates.

Banks are increasingly reluctant to lend each other money due the uncertainty created by the sub-prime mortgage crisis.

Japan’s overnight call rate averaged 0.46% today before the intervention. The BOJ is currently making aggressive efforts to liquidate the market in order to ensure that borrowing costs remain affordable for business and households.

Mitsubishi UFJ Refutes Links With Morgan Stanley

Mitsubishi UFJ Financial Group today rebutted claims that the lender and U.S. investment bank Morgan Stanley are mulling merging their brokerage units in Japan. Brokerage analysts have been expecting such a move since the lender acquired 21% stake in U.S. investment banker for $9 billion.

Mitsubishi UFJ announced yesterday that it will buy a 19.9% stake in British investment company Aberdeen Asset Management Plc.

Yen Rises

The yen rose 0.84% against the dollar to 105.85 from 105.88 yesterday. The worries of falling exports and weakening in the U.S. dollar are concerning the foreign exchange traders.

Gainers & Losers

Fast Retailing led advancers in the Nikkei 225 index shares with a rise of 13.59% followed by increases in UNY Co. Ltd. of 6.05%, in Nichirei Corp. of 4.96%, in Sumitomo Chemical Co. of 3.95%, and Sumitomo Osaka of 3.95%.

Fast Retailing advanced after reporting that sales at its 672 Uniqlo stores gained 21% from a year earlier.

NGK Insulators led decliners in the Nikkei 225 index shares with a fall of 11.08% followed by losses in Nikon Corp. of 10.24%, in Nippon Express of 9.81%, in Minebea Corp. of 9.14%, and Konica Minolta of 8.67%.

Technology stocks and exporters slid on the gloomy outlook of the global economy. Komatsu shed 8.12% and Fujifilm declined 7.02%.

Automakers declined the most after researcher Autodata Corp reported yesterday that the U.S. car sales dropped.

The U.S. auto sales in September fell to 15-year low to 12.5 million units from 16.1 million a year ago.

Japanese auto makers’ sales declined 30% from a year ago.

Toyota Motor Sales U.S.A Inc sales in September declined 32.3% to 144,260 units from 213,042 units in the same period a year earlier and for the first nine months sales declined 10.4% to 1.79 million units.

American Honda Motor Co. Inc sales in the month plummeted 24% to 96,626 units from 127,200 units a year ago and in the first nine months declined 1.1% to 1.18 million vehicles.

Nissan North America Inc sales in the month plunged 36.8% to 59,565 units from 94,269 units from the same period a year ago and fell in the first nine months 785,693 vehicles.

Toyota Motor plunged 5.4% to 4,080 yen, Honda Motor dropped 5.5% to 2,835 yen, Isuzu Motors fell 6.84% and Nissan slumped 7.04% to 621 yen.