Japan Stocks Plummet 11.4%

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

Japan stocks plummeted 11.4% tracking losses in New York. Construction machiery, financials and exporters fell sharply. Komatsu, Hitachi Construction Machinery and Kubota Corp dropped more than 15%. Prime Minister Aso said that the bank bailout plan may not be sufficient.

[R]5:00AM New York, 7:00PM Tokyo – Stocks in Japan plummeted after the indexes in U.S. dropped in one of the largest one-day drop in 21 years. Construction machinery and financials led the decliners.[/R]

Japan market averages plummeted 11.4% as investor confidence dropped on concern that the global economy is heading into a recession.

The Osaka Securities Exchange temporarily suspended trading in Nikkei futures after a fall in shares triggered circuit breakers. Commodity stocks extended losses on mounting fears demand for raw materials will fall.

Construction machinery companies fell sharply on the worries that demand from China and other emerging markets will drop. Komatsu fell 15% to 1,167 yen, Hitachi Construction Machinery plunged 18% to 1,399 yen and Kubota Corp plummeted 14.5% or 73 yen to 430 yen.

Market Sentiment

In Tokyo trading Nikkei 225 declined 11.41% or 1,089.02 to 8,458.45, the most since the October 1987 stock market crash, and the broader Topix Index fell 9.5% or 90.99 to 864.52.

In the first section of the Tokyo Stock Exchange 11 billion shares worth 980 billion shares were traded and in the second section 250 million shares valued at 1.9 billion yen changed hands.

Of the Nikkei 225 index stocks, 2 rose and 223 declined. Kao Corp. led advancers in the index shares with a rise of 1.75%.

U.S. Retail Sales Drop 1.2% in September

The U.S. Census Bureau reported yesterday that retail trade sales plummeted 1.2% from a month ago and declined 1.4% from a year earlier in September.

Advance retail and food services sales for September, adjusted for seasonal variation fell 1.2% from a month ago and 1% from a year earlier to $375.5 billion.

Total sales for the three months ended September rose 0.8% from September 2007.

Gasoline station sales increased 17.8% from the same period a year earlier, while sales of food and beverage stores gained 5.1% from a year ago.

BoJ Injects 300 billion yen in Money Market

The Bank of Japan injected an additional 300 billion yen today in the money market to provide added liquidity for interbank lending.

Overnight call rates fell to 0.46% from 0.53% after the intervention.

Separately, Prime Minister Taro Aso noted in his address to lawmakers today that the $250 billion bailout plan for U.S. banks will not stabilize the financial markets. Aso added that the U.S. must expedite efforts to bail out the financial institutions.

Gainers & Losers

Kao Corp. led advancers in the Nikkei 225 index shares with a rise of 1.75% followed by increases in Bridgestone Corp. of 0.40%.

Bridgestone increased after crude oil prices declined 2.1% to $72.96 per barrel.

Dowa Holdings Co. led decliners in the Nikkei 225 index shares with a fall of 19.32% followed by losses in Meidensha Corp. of 18.66%, in Toho Zinc of 18.52%, in Mitsubishi Paper of 18.29%, and Advantest Corp. of 18.23%.

Commodity stocks extended losses as metal and crude oil prices plunged.

Mitsui & Co to Acquire Uranium One Australia Assets

Mitsui & Co. has agreed to acquire a 49% stake in Uranium One Inc. Australian business portfolio and Honeymoon project for A$104 million. The projects include Goulds Dam and Billeroo projects, including prospective tenements on the Stuart Shelf and Eyre Peninsula.

The bulk of the funds will be used to develop the Honeymoon project to commercial production.