Japan Stocks Soar

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

Japan stocks soared in the largest one-day gain in nearly 40 years after dropping to a 16-year low. European government took agressive steps to support banking system. Germany, Spain, France and Holland agreed to commit $1.6 trillion. UK will spend $65 billion to take direct stakes in banks.

[R]5:00AM New York, 7:00PM Tokyo – Stocks in Japan surged in the largest one-day gain after European government took aggressive steps to bail out troubled banks.[/R]

Stocks in Japan rose the most since 1969, rebounding from a 16-year dip on Friday last week as governments and central banks in the U.S. and Europe shored up efforts to stabilize the financial markets.

The markets were closed on Monday.

However concern about conditions on the local market continued as government data showed that consumer sentiment remained depressed in September.

Market Sentiment

In Tokyo trading Nikkei 225 advanced the most on record, and the broader Topix Index soared 14% or 115.44 to 956.30.

In the first section of the Tokyo Stock Exchange 23 billion shares worth 1.9 trillion yen were traded and in the second section 662 million shares valued at 5.4 billion yen changed hands.

U.S. Invests $250 billion in Nine Banks

Secretary Henry Paulson is expected to announce a plan to invest $250 billion immediately in nine largest banks and financial companies but did not name them. The investment will be exchanged for preferred stocks, curtail executive pay and also take warrants that will convert to common stocks.

The move is designed to restore confidence in the banking system and not force the government to choose one over the other. Treasury also expects to invest additional $250 billion in another 1,000 banks.

Sources in U.S. Treasury and FDIC confirm that nine institutions that have agreed to take capital after pressured by Treasury Secretary include Bank of America, Merrill Lynch, Morgan Stanley, JP Morgan Chase, Bank of New York, State Street Corp, Wells Fargo, Goldman Sachs and Citigroup.

Japan to Suspend Sale of Public-Sector Owned Stocks

Japan’s Minister of Finance Shoichi Nakagawa said today in a statement the government will take pro-active measures to stabilize financial markets by relaxing the repurchase of stock by corporations and strengthen short selling disclosures.

The sale of public sector-owned stocks will be considered and the Bank of Japan will be requested to act accordingly regarding its own stock.

Nakagawa will be meeting executives of financial institutions tomorrow to emphasize the need for them to “maintain adequate financial intermediary functions”.

CPI Rise in September

The Cabinet Office reported on its Web site today that the consumer price index increased to 31.4 in September from 30.1 a month earlier.

Overall livelihood cost index gained to 30.6 from 28.5 a month ago. In addition, the income growth and employment index edged up to 35.8 from 35 and 28.9 from 28.4 respectively.

The willingness to buy durable goods advanced 30.3 in September from 28.3 a month earlier.

The yen weakened against the dollar to as much as 103.07 today from 99.16 at the close of stock trading in Tokyo on Oct. 10.